House Republicans press Fed on digital dollar

Republicans on the House Financial Services Committee want more information from the Federal Reserve System on a potential US Central Bank Digital Currency, ahead of a deadline set by President Joe Biden’s executive order on digital assets. 

Lawmakers wrote a letter to Board of Governors Vice Chair Lael Brainard on Wednesday, asking for clarification the Fed's thinking around a potential digital dollar, including whether curtailing the use of digital assets is part of the Fed's motivation. 

Brainard testified in May on the potential impacts of a Fed-issued digital currency. She told a banking industry conference on Wednesday that the central bank still needs to answer key questions around the possible creation of a digital dollar and suggested that a decision was not imminent.  

The lawmakers, led by the committee's top Republican Rep. Patrick McHenry (R-N.C.), want more information on whether Fed leadership believes it needs Congressional approval to move forward with a digital dollar, and whether the Fed would create accounts for individual Americans a move that could significantly disrupt the banking industry. 

During her May testimony, Brainard said that the Fed would need support from Congress and the executive branch to issue a digital currency. Republicans signing the letter pressed for an explicit answer as to whether that meant the Fed thought a digital dollar would require a new law from Congress. 

“In your opinion, does support mean an explicit law from Congress authorizing the Fed to issue a digital currency?,” the lawmakers wrote.

The officials requested Brainard respond in writing by Sept. 30.