February 23, 2024

Several countries — including the US — are conducting research around the development of their respective central bank digital currencies (CBDC). However, ahead of plans to launch a pilot of the ‘digital dollar’ in the US, some lawmakers are questioning the development of a CBDC in the country. US Congressman Alex Mooney has proposed a bill called the Digital Dollar Pilot Prevention Act (H.R. 3712). The legislation urges the US Federal Reserve to stop the research and development related to the introduction of the CBDC or digital dollar.

In his proposal, the US Congressman has said that CBDCs could be a threat to “law abiding Americans”. The Congressman further states that these centralised digital currencies are “being used by authoritarian countries right now to crack down on dissent.”

“This bill would prohibit the Federal Reserve from establishing, carrying out, or approving a program intended to test the practicability of issuing a CBDC,” the Congressman said.

A Central Bank Digital Currency (CBDC) is the virtual representation of a fiat currency on a blockchain network. Similar to cryptocurrency in functionality, but controlled by central banks — CBDCs are capable of registering permanent records of transactions on the blockchain, while also reducing national dependency on cash notes.

Despite its advanced operability element, a group of US lawmakers have joined hands with Mooney on this proposal. A total of 14 House Republicans have chosen to co-sponsor this bill along with the Congressman. The proposal reportedly notes that its acceptance would “prevent the Federal Reserve from bypassing the will of Congress.”

Among other concerns, the co-sponsors of the bill have united over fears of the CBDC posing a threat to the financial privacy of the citizens while potentially opening the door to government surveillance.

“The Federal Reserve caught attention late last year for its CBDC pilot projects, even contracting with the private sector to build potential CBDCs for the United States which went beyond traditional research,” Mooney has added.

This is not the first time however, that policymakers in the US have spoken against introducing a digital dollar. Previously, US Senator Ted Cruz introduced the “No Digital Dollar Act” while Congressman Tom Emmer proposed the “CBDC Anti-Surveillance State Act.”

Meanwhile, Hong Kong, China, India, and Australia are among many countries that are accelerating efforts around their CBDC initiatives.

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