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The payments landscape for community banks is changing rapidly as traditional payments converge with new instant payment systems and emerging cryptocurrencies. It is critical for Community Banks to maintain awareness of developments in the payments space to assess new opportunities, mitigate risks, and ensure that their payment strategy aligns with overall business plans.
Sep. 16, 2022
Sen. Mike Lee (R-Utah) introduced legislation to prohibit the Federal Reserve from issuing a central bank digital currency.
New Bill: The No CBDC Act would bar the Fed or any other agency from implementing a direct-to-consumer or intermediated CBDC model. Lee said a U.S. CBDC would centralize the government’s control over the economy, pose risks to consumer privacy and liberty, and convert banks to wallets instead of private lending institutions.
Bill Developments: The House Financial Services Committee is deliberating legislation on stablecoins, with congressional authorization of a U.S. CBDC among the provisions under consideration. The committee decided not to consider the stablecoin bill at a July markup after ICBA expressed concerns that it was not publicly vetted, as reported by The Wall Street Journal, Politico, and Reuters.
ICBA Position: In recent comment letters to the Treasury and Commerce departments, ICBA said Congress should not authorize the creation of a U.S. CBDC, citing the risks of a digital dollar to existing banking and payments systems.