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Legislation to prohibit the Federal Reserve from exploring the creation of a central bank digital currency (CBDC) through a pilot program was introduced Wednesday by Rep. Alex Mooney, R-W.Va. While NAFCU is supportive of a clear regulatory framework for cryptocurrency and other financial technologies, the association has consistently opposed the creation of a CBDC. 

The Digital Dollar Pilot Prevention Act would prevent the Fed from establishing, carrying out, or approving a program intended to test the practicability of issuing a CBDC. NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter in support following its introduction.

“NAFCU is concerned that the costly tradeoffs are very likely to exceed hypothesized benefits of a CBDC which are, to this point, difficult to identify,” Thaler wrote. “Additionally, the administration of a CBDC will distract from the Federal Reserve’s dual mandate of achieving both stable prices and maximum sustainable employment. The Federal Reserve should instead focus on the existing financial sector infrastructure, encourage responsible innovation, ensure a level playing field for all, and apply consumer financial protection law consistently.”

Earlier this year, Rep. Tom Emmer, R-Minn., introduced the CBDC Anti-Surveillance State Act to prohibit the Fed from issuing a CBDC and using it to implement monetary policy to ease privacy concerns and protect the stability of the financial system. NAFCU President and CEO Dan Berger offered the association’s support for the bill.

NAFCU has shared concerns about CBDC development with the Fed, Treasury, and Commerce Department, arguing the costs of creating outweigh the benefits and credit unions represent a superior and safer alternative for advancing financial inclusion goals and promoting affordable access to payments. 

The association will continue to engage lawmakers to advocate for the credit union industry and the safety and soundness of the American financial system.