The US Senate passed legislation Thursday that would prohibit the Federal Reserve from launching a central bank digital currency for at least four years. The bill, which cleared the chamber with bipartisan support, now heads to the House, where its fate is uncertain.
What the bill does
The measure imposes a moratorium on the Fed’s ability to issue a CBDC directly to individuals or businesses. It also bars the central bank from using any digital dollar system for monetary policy purposes during the freeze period. Supporters say the pause gives lawmakers time to study privacy, security and economic risks before the government creates a fully digital currency.
Why the ban gained traction
Lawmakers who pushed the bill argued that a Fed-issued digital dollar could let the government monitor personal transactions, compete with private banks and destabilize the existing financial system. Critics of the legislation countered that the US risks falling behind China and other countries already piloting CBDCs. But the bill’s backers stressed that rushing into a digital currency without clear safeguards could harm consumers and financial stability.
What happens next
The House has not scheduled a vote on a companion bill. Even if it passes there, President Joe Biden has not taken a public position on the CBDC moratorium. The Federal Reserve itself has said it has no immediate plans to issue a digital dollar, but it has been researching the technology for years. The four-year window in the Senate bill would effectively push any potential launch well past the next presidential term.
