Speaking at the American Bankers Association Washington Summit today House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) outlined his legislative priorities with respect to innovation in financial services, which include defining stablecoins, defining digital assets and addressing the question of central bank digital currencies.
McHenry emphasized that “Congress has to legislate proactively” to grant the Federal Reserve authority to issue CBDCs. “We have to have a thoughtful approach that understands the benefits and costs of these options and opportunities,” McHenry said “It is incumbent upon Congress to act here if we’re going to give the Fed the ability to issue CBDC—it must be Congress that legislates that and protects our financial system and people’s property rights to their money.”
Of the three issues, McHenry noted that the easiest would be to define and create a regulatory architecture around stablecoins, adding that “a well-regulated stablecoin regime is in our interest,” and that there is some agreement between him and House Financial Services Committee Chairwoman Waters on how to do so. “A stablecoin should not be simply a bank deposit,” McHenry said. “It should be backed by 100% high-quality liquid assets and should be thought of mainly as a payments mechanism.”
As lawmakers contemplate action on a CBDC, ABA has cautioned that the issuance of a CBDC could compete with bank deposits and limit banks’ ability to power economic growth.