Permanent CBDC Ban Act
- Sponsor
- Rep. Cloud, Michael [R-TX-27]
- Committees
- Financial Services Committee (primary)
- Last action
- Aug 3, 2026
Bottom line
This bill seeks to permanently prevent the Federal Reserve from creating a central bank digital currency, aiming to protect financial privacy and prevent government overreach in monetary policy.
What it actually does
This bill permanently prohibits the Board of Governors of the Federal Reserve System and any Federal reserve bank from issuing or creating a central bank digital currency (CBDC). It achieves this by amending the Federal Reserve Act to remove any potential authority for such an action.
Proponents argue
Supporters argue that a permanent ban on a central bank digital currency is essential to protect individual financial privacy, prevent potential government surveillance of transactions, and safeguard against government overreach into the financial lives of citizens. They contend that a CBDC could centralize financial power and undermine the existing decentralized financial system.
Opponents contend
Opponents might argue that a blanket prohibition on a CBDC stifles financial innovation and prevents the United States from exploring a tool that could offer benefits such as enhanced financial inclusion, more efficient payment systems, and a stronger international standing for the dollar. They may also contend that a well-designed CBDC could address privacy concerns while providing public benefits.
The bill is extremely short and easy to read, allowing ample time for comprehensive evaluation.
Section 2
Permanent Prohibition on Central Bank Digital Currency
This section amends the Federal Reserve Act to permanently prevent the Board of Governors of the Federal Reserve System or any Federal reserve bank from issuing or creating a central bank digital currency (CBDC). It does this by striking an existing subsection (d) and redesignating subsection (e) as subsection (d), effectively removing any potential authority or framework for a CBDC that might have existed or been implied within the Act.
Supporters argue
Supporters argue this provision is crucial for safeguarding individual financial privacy and preventing potential government overreach into personal transactions. They contend that a CBDC could enable surveillance and control over citizens' spending, and that the existing private sector innovation in digital payments is sufficient without a government-issued alternative.
Critics contend
Critics might argue that this blanket prohibition stifles potential innovation in the U.S. financial system and prevents the exploration of a tool that could enhance financial inclusion, improve payment efficiency, and strengthen the dollar's international standing. They may also contend that a well-designed CBDC could address privacy concerns while offering significant public benefits.
Tradeoffs
The provision navigates the tension between potential financial innovation and privacy concerns, as well as the balance between government control over monetary instruments and private sector development. It prioritizes privacy and limited government intervention over potential benefits of a state-backed digital currency.