Summary#
This bill, called the Permanent CBDC Ban Act, would stop the Federal Reserve from issuing or creating a central bank digital currency (CBDC). It does this by changing the Federal Reserve Act so the Fed and Federal reserve banks are permanently barred from issuing a CBDC. The bill’s broad goal is to prohibit a U.S. central bank digital currency.
- Main change: It amends the Federal Reserve Act to prohibit the Board of Governors of the Federal Reserve System and Federal reserve banks from issuing or creating a CBDC.
- Who it names: The prohibition applies specifically to the Board of Governors and Federal reserve banks.
- Legal move: The bill strikes one subsection of the law and redesignates another; the practical effect stated is a permanent ban on Fed-issued CBDC.
- Status: Introduced in the House and referred to the House Committee on Financial Services.
- Sponsors: Sponsored by Rep. Michael Cloud and many co-sponsors (listed in the bill text).
What it means for you#
- Federal Reserve and Fed staff: The Fed would be barred from issuing or creating a CBDC. This limits the Fed’s legal authority to launch a Fed-issued digital currency.
- Banks and financial firms: The bill does not directly change private bank rules. However, if a Fed CBDC had been planned, banks’ future roles in payments or settlement with a CBDC would not materialize if the ban is enacted. This is a likely effect, not a guaranteed one.
- Consumers and businesses: The bill does not require any change to how you bank or pay today. If a Fed CBDC had been proposed as a new payment option, that option would not be available under this bill.
- Private cryptocurrencies and stablecoins: The bill does not change the legal status of private digital currencies. It addresses only a central bank digital currency issued by the Federal Reserve.
- State or local governments: The bill does not say it affects state or local actions. It targets the Federal Reserve’s authority.
Expenses#
No publicly available information.
- The bill text and accompanying material do not include a fiscal note or cost estimate.
- It is unclear whether the ban would increase, decrease, or shift federal spending on digital currency research or related technology projects. Any such fiscal effects are not described in the provided material.
Proponents' View#
The bill’s text and title show its primary aim. From that, possible arguments in favor include:
- The bill appears intended to permanently block the creation of a Fed-issued digital currency.
- A possible argument for the bill is that it would preserve the current structure of money and payment options by preventing a new form of centrally issued digital cash.
- The bill could be seen as protecting against uses of a CBDC that some would view as expanding central bank roles into retail payments.
Opponents' View#
The bill’s text does not include explicit criticisms. Based on what the bill would do, here are possible concerns or questions:
- One concern is that the bill removes a legal option the Fed might use in the future. That could limit tools the Fed might want for payments modernization or monetary policy.
- The bill does not explain how it affects Fed research, pilot projects, or cooperation with private firms and other governments on digital currency work. It is unclear whether those activities would be allowed.
- It is not clear how the ban would interact with private-sector payment innovation or with efforts to regulate stablecoins and other digital assets.
- The fiscal effects and administrative consequences of a permanent prohibition are not described, leaving questions about costs or savings.