Yesterday the U.S. House Committee on Financial Services held a hearing on a potential digital dollar. Several Republican representatives quizzed Federal Reserve Vice Chair Lael Brainard about whether or not the issuance of a central bank digital dollar (CBDC) would require legislation.
Governor Brainard repeatedly referred to the working paper on CBDC issued by the Fed in January. It states, “The Federal Reserve does not intend to proceed with issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.” The use of the terms “ideally” and “intend” were interpreted as caveats by the Republicans.
“It seems like there’s some wiggle room you’re trying to show,” said Patrick McHenry, the Ranking Republican on the Committee. He emphasized that the Fed is constrained by statute, to which Brainard responded that it’s clear that the Federal Reserve is precluded from offering individual accounts.
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