On Tuesday, Federal Reserve Chair Jerome Powell met behind closed doors with Democrats on the House Financial Services Committee, Politico reported. A week ago Committee ranking Democrat Maxine Waters said that bipartisan agreement on stablecoin legislation was close, also according to Politico.
“We need a framework for stablecoins,” Powell said, according to a source at Tuesday’s meeting. Powell added that he is “very supportive and am glad that we are close.”
Just over six months ago, Republicans voted a draft stablecoin Bill through the same Committee, with strong opposition from Democrats. The vote came after one of the more acrimonious Committee sessions, which didn’t bode well for a full House or Senate vote.
The Fed Chair also touched on central bank digital currency (CBDC). “If we’re going to have a CBDC, Congress needs to authorize it,” according to the source. “We aren’t advocates, but we haven’t made a decision to recommend a CBDC to Congress.”
A CBDC Bill could struggle to get passed by Congress. The key points any legislation would need to address are the impact on bank lending and privacy. Republicans have demonstrated strong opposition to a CBDC on the grounds of privacy. Most Democrats are supportive, except for a handful that fear a reduction in bank deposits could impact bank lending.
Meanwhile, Republicans have been promoting state-level anti-CBDC Bills in an attempt to obstruct a CBDC should it be launched. Three states have passed legislation. At the start of the month, 11 states had pending Bills. Two weeks later, that figure is now 13.
