H.R.1919 - Anti-CBDC Surveillance State Act (119th Congress)
Summary
H.R.1919, the Anti-CBDC Surveillance State Act, aims to amend the Federal Reserve Act to prevent Federal Reserve Banks from offering financial products directly to individuals or issuing a central bank digital currency (CBDC). The bill also prohibits the use of a CBDC for monetary policy implementation. It asserts that the Federal Reserve currently lacks the authority to issue a CBDC without explicit Congressional authorization.
The bill explicitly prohibits the Federal Reserve from testing, studying, developing, creating, or implementing a CBDC or any similar digital asset. This includes both direct and indirect issuance through financial institutions or other intermediaries.
The bill includes an exception for dollar-denominated currencies that are open, permissionless, private, and fully preserve the privacy protections of United States coins and physical currency.
Expected Effects
If enacted, this bill would prevent the Federal Reserve from developing and issuing a CBDC. This would maintain the current financial system structure, relying on traditional currency and private digital payment systems. The bill could also limit the Federal Reserve's ability to adapt to future technological advancements in the financial sector.
This could potentially stifle innovation in payment systems and limit the government's ability to respond to the increasing popularity of cryptocurrencies. It would also preserve the existing privacy protections associated with physical currency.
Potential Benefits
- Protection of Financial Privacy: Prevents potential government surveillance of individual financial transactions through a CBDC.
- Preservation of Current Banking System: Maintains the role of private banks as intermediaries in the financial system.
- Limiting Federal Reserve Power: Restricts the Federal Reserve's control over monetary policy and individual finances.
- Encourages Private Innovation: Allows private companies to continue leading innovation in the digital currency space.
- Upholds Article 1, Section 8: Reinforces Congress's authority over money creation.
Most Benefited Areas:
Potential Disadvantages
- Missed Opportunity for Financial Innovation: Prevents the potential benefits of a CBDC, such as faster and cheaper payments.
- Reduced Competitiveness: May put the U.S. at a disadvantage compared to other countries that are developing CBDCs.
- Limited Monetary Policy Options: Restricts the Federal Reserve's ability to respond to future economic crises.
- Exclusion of Unbanked Populations: A CBDC could potentially provide financial services to those without bank accounts, a benefit this bill forecloses.
- Stifled Research and Development: Prevents the Federal Reserve from exploring and understanding the potential implications of digital currencies.
Constitutional Alignment
The bill aligns with Article I, Section 8 of the Constitution, which grants Congress the power to coin money and regulate its value. By asserting that the Federal Reserve needs Congressional authorization to issue a CBDC, the bill reinforces Congress's constitutional authority over monetary policy. The bill also indirectly touches upon the Fourth Amendment, which protects against unreasonable searches and seizures, as a CBDC could potentially enable greater government surveillance of financial transactions. The bill's intent to protect financial privacy aligns with the spirit of the Fourth Amendment, though it doesn't directly invoke it.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).