Overview
Title
To amend the Federal Reserve Act to limit the ability of Federal Reserve banks to issue central bank digital currency.
ELI5 AI
The No CBDC Act wants to make sure that special banks, called Federal Reserve banks, can't give out or keep digital money like cash for people or companies. It's like saying these banks shouldn't play with digital coins as if they were toys.
Summary AI
H. R. 1430, also known as the "No Central Bank Digital Currency Act" or "No CBDC Act," seeks to restrict the actions of Federal Reserve banks concerning digital currency. The bill proposes an amendment to the Federal Reserve Act that would prevent banks from directly issuing central bank digital currencies (CBDCs) to individuals or entities and from providing related services. Additionally, it prohibits Federal Reserve banks from holding digital currencies as assets or liabilities on their balance sheets.
Published
Keywords AI
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Bill Statistics
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Language
Complexity
AnalysisAI
Summary of the Bill
The proposed legislation, introduced as H.R. 1430 in the House of Representatives, seeks to amend the Federal Reserve Act. The bill aims to prevent Federal Reserve banks and associated entities from issuing a central bank digital currency (CBDC) directly to individuals or maintaining digital currencies on their balance sheets. Officially titled the “No Central Bank Digital Currency Act” or the “No CBDC Act,” this proposal explicitly prohibits entities like the Federal Reserve, the Board, and the Treasury Secretary from having direct dealings with individuals regarding CBDCs or related services.
Significant Issues
One of the key issues identified in the bill is the restrictive nature of its language. The outright ban on Federal Reserve and related entities from issuing CBDCs could limit future technological advancements within the rapidly evolving digital financial sector. As technology progresses, having the ability to adapt and innovate becomes crucial, and strict prohibitions may hinder such progression.
The bill does not provide for any exemptions, which could be problematic if unforeseen circumstances arise or if technology and financial landscapes evolve in ways that require flexibility. Additionally, there is no mention of international cooperation or alignment with global policies, which could impact the United States’ ability to maintain financial stability in an increasingly globalized economy.
Furthermore, the complex language used in the bill may create transparency and comprehension challenges. The legal intricacy could make it difficult for the general public to fully understand the implications, potentially reducing informed public debate.
Another issue is the lack of clarity regarding the term "digital currency intermediary," which is not defined within the bill. This ambiguity could lead to different interpretations and applications, potentially complicating enforceability and compliance.
Impact on the Public and Stakeholders
The bill’s restrictions could have broad impacts on the general public and specific stakeholders. By limiting the Federal Reserve’s ability to engage with digital currencies, the public might miss out on the efficiencies and conveniences that CBDCs could offer. Moreover, those relying on digital finance innovation might find their opportunities curtailed.
For businesses and entrepreneurs within the fintech industry, particularly those developing digital payment systems or cryptocurrency solutions, the bill could pose significant obstacles. These stakeholders could face limitations on how they incorporate or engage with emerging technologies, potentially stifling growth and innovation.
On the other hand, the bill might be seen positively by those concerned about the risks associated with digital currencies, such as privacy issues or the potential for economic destabilization. By preventing direct issuance of digital currencies, the bill could be perceived as a safeguard against such risks.
Additionally, lawmakers and regulatory bodies might find the bill supports traditional financial systems, by ensuring that existing monetary policies and frameworks remain in place without the added complexities of integrating digital currencies.
Overall, while the intent of H.R. 1430 is to regulate and control the issuance of digital currencies by central banks, it raises significant issues regarding adaptability, innovation, and maintaining pace with global financial developments.
Issues
The language in Section 2 is very restrictive and could potentially hinder future technological developments or adaptations regarding central bank digital currencies, which might be significant for ongoing and future digital financial innovations.
Section 2's lack of provisions for exemptions under certain circumstances might be problematic as technology and financial practices evolve, making flexible adaptation difficult.
The absence of a clause in Section 2 addressing international cooperation or alignment with international policies and regulations could be crucial for maintaining global financial stability.
Section 2 might face transparency and comprehension challenges due to the complexity of the text, which may be difficult for the general public to understand, reducing informed public discourse on the matter.
The term 'digital currency intermediary' in Section 2 is not clearly defined, potentially leading to ambiguity regarding its scope and application.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states that this legislation can be referred to as the "No Central Bank Digital Currency Act" or the "No CBDC Act."
2. Central bank digital currency Read Opens in new tab
Summary AI
The section amends the Federal Reserve Act to prevent Federal Reserve banks, the Board, the Treasury Secretary, and any related entities from issuing digital currency directly to individuals or holding digital currencies on their balance sheets.