Congress Eyes Permanent Ban on Federal Reserve Digital Dollar Plans

Congress is moving closer to making a permanent ban on the Federal Reserve issuing a central bank digital currency (CBDC). The 21st Century ROAD to Housing Act, which includes an amendment by Senator Ted Cruz, would prohibit the Fed from creating a digital dollar. This move is seen as more likely to pass than a temporary extension of the current ban.

TD Cowen's managing director Jaret Seiberg said that the permanent ban is broadly consistent with the Federal Reserve's existing public stance and removes uncertainty about future leadership. A new administration or Fed chair could potentially reverse the current stance without a statutory prohibition in place, making a permanent ban appealing to stablecoin issuers.

Congressman Ralph Norman signed a letter last week asking for a permanent CBDC ban, citing concerns that it would give the government too much control over how Americans spend their money. He called the concept 'overreach at its core.'