Central Bank Digital Currency Study Act of 2021
Bill: H.R.2211 | Sponsor: Rep. Foster, Bill (D-IL)
Policy area: Finance and Financial Sector

Summary:
Central Bank Digital Currency Study Act of 2021
This bill requires the Board of Governors of the Federal Reserve System to report on the impacts of the introduction of a central bank digital currency (CBDC) on consumers, businesses, monetary policy, and the U.S. financial system. Several countries are currently developing CBDCs in response to the growth of privately issued digital currencies such as Bitcoin.

To direct the Board of Governors of the Federal Reserve System to 
   conduct a study on central bank digital currencies, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Central Bank Digital Currency Study 
Act of 2021''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) A January 2021 survey by the Bank for International 
        Settlements found that 86 percent of central banks, 
        representing countries with close to 72 percent of the world's 
        population and 91 percent of global economic output, are 
        currently or will soon be engaged in work relating to CBDC, 
        with almost three-quarters of such central banks having moved 
        beyond the research of CBDC to experimentation, proof of 
        concept, or testing activities.
            (2) Since December 2016, the European Central Bank and the 
        Bank of Japan have conducted a joint research project named 
        ``Project Stella'', which aims to conduct experimental work and 
        conceptual studies exploring the opportunities of digital 
        ledger technologies and challenges for the future of financial 
        market infrastructures, including CBDCs.
            (3) Since 2014, the People's Bank of China has conducted 
        research and development activities for a CBDC, and in October 
        2020, launched a digital yuan pilot program in Shenzhen.
            (4) In August 2020, the Federal Reserve Bank of Boston 
        announced a collaboration with the Digital Currency Initiative 
        at the Massachusetts Institute of Technology to perform 
        technical research related to a central bank digital currency.
            (5) In October 2020, the Financial Stability Board, in 
        coordination with the BIS's Committee on Payments and Market 
        Infrastructures, released a report to provide a roadmap for 
        enhancing cross-border payments, including an exploration of 
        new payment infrastructures presented by central bank digital 
        currencies.
            (6) In January 2020, the Bank for International Settlements 
        announced that the Bank of England, the Bank of Canada, the 
        Bank of Japan, the European Central Bank, the Sveriges 
        Riksbank, the Swiss National Bank, and the Bank of 
        International Settlements had formed a group to share 
        information on the potential uses of CBDC in the central banks' 
        jurisdictions, as well as information on potential economic, 
        functional, and technical design choices.
            (7) According to data from the International Monetary Fund, 
        as of the third quarter of 2019, the United States dollar share 
        of global currency reserves totaled $6,750,000,000,000, or 
        61.78 percent of all allocated reserves, and the standing of 
        the United States dollar as the world's predominant reserve 
        currency enables the United States to use economic sanctions as 
        a foreign policy tool.
            (8) According to a 2018 report by the Board of Governors of 
        the Federal Reserve System, cash continues to be the most 
        frequently used payment instrument, representing 30 percent of 
        all transactions and 55 percent of transactions under $10, with 
        77 percent of those transactions made in-person.
            (9) The Federal Reserve System is responsible for, among 
        other things, conducting United States monetary policy, 
        promoting the stability of the financial system, supervising 
        financial institutions to ensure safety and soundness, ensuring 
        the safety and efficiency of payment systems, and issuing and 
        circulating Federal Reserve notes.

SEC. 3. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) the Board of Governors should continue to conduct 
        research on, design, and develop, a CBDC that takes into 
        account its impact on consumers, businesses, the United States 
        financial system, and the United States economy, including the 
        potential impact of a CBDC on monetary policy; and
            (2) the United States should strive to maintain its 
        leadership in financial technology and ensure that the U.S. 
        dollar remains the predominant reserve currency in the world 
        economy.

SEC. 4. STUDY AND REPORT.

    (a) Study.--The Board of Governors of the Federal Reserve System, 
in consultation with the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, the Department of the Treasury, the 
Securities and Exchange Commission, and the Commodity Futures Trading 
Commission, shall conduct a study on the impact of the introduction of 
a CBDC on--
            (1) consumers and small businesses, including with respect 
        to financial inclusion, accessibility, safety, privacy, 
        convenience, speed, and price considerations;
            (2) the conduct of monetary policy and interaction with 
        existing monetary policy tools;
            (3) the effectiveness of United States economic sanctions 
        programs and the status of the United States dollar as a 
        reserve currency;
            (4) the United States financial system and banking sector, 
        including liquidity, lending, and financial stability 
        mechanisms;
            (5) the United States payments and cross-border payments 
        ecosystems, including the FedNow Service;
            (6) compliance with existing AML/BSA, illicit financing, 
        and related laws and regulations, and electronic recordkeeping 
        requirements;
            (7) data privacy and security issues related to CBDC, 
        including transaction record anonymity and digital identity 
        authentication;
            (8) the international technical infrastructure and 
        implementation of such a system, including with respect to 
        interoperability, cybersecurity, resilience, offline 
        transaction capability, and programmability;
            (9) the likely participants in a CBDC system, their 
        functions, and the benefits and risks of having third parties 
        perform value-added functions, such as fraud insurance and 
        blocking suspicious transactions; and
            (10) the operational functioning of a CBDC system, 
        including--
                    (A) how transactions would be initiated, validated, 
                and processed;
                    (B) how users would interact with the system; and
                    (C) the role of the private sector and public-
                private partnerships.
    (b) Report.--Not later than one year after the date of the 
enactment of this Act, the Board of Governors shall submit to the 
Committee on Financial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the Senate a report 
that provides the following:
            (1) The results of the study conducted under subsection 
        (a).
            (2) Based on such study, one or more recommended feasible 
        models for the development of a CBDC that includes a 
        description of the salient design, policy, and technical 
        considerations therein, including a model which takes into 
        account the following:
                    (A) Financial access and inclusion for unbanked and 
                underbanked consumers, with the ability to make real-
                time digital payments and transactions through digital 
                wallets.
                    (B) Strong cybersecurity controls capable of 
                mitigating cyber-related risks including ransomware, 
                malware, and fraud and theft.
                    (C) A strong digital identity verification system 
                to prevent identity fraud and allow for compliance with 
                applicable requirements relating to anti-money 
                laundering, illicit financing, and security and 
                authentication standards.
                    (D) Mechanisms to account for instances of mistake, 
                unauthorized transfers, or fraud which may require 
                transaction modification or reversibility.
                    (E) The capacity for third-party features such as 
                custody and recoverability, account and transaction 
                monitoring, and other services.
                    (F) Third-party transaction anonymity which 
                protects user privacy and only allows for traceability 
                when otherwise required by law, including through a 
                court order.
                    (G) Interoperability with other U.S. and 
                international payments systems.
            (3) A timeline for CBDC development and deployment of the 
        recommended models in paragraph (2), that includes relevant 
        interim milestones.
            (4) A description of any legal authorities, if any, the 
        Board of Governors would require to implement the CBDC model 
        set forth in paragraph (2), including any authority with 
        respect to--
                    (A) the issuance of digital currency;
                    (B) licensing and supervision of digital currency 
                transmission services and nonbank technology providers 
                to the extent they provide CBDC-related services; and
                    (C) international agreements which would be 
                necessary to allow foreign nationals to utilize CBDC's 
                while preserving appropriate privacy and legal 
                traceability.
    (c) CBDC Defined.--In this Act, the term ``CBDC'' means central 
bank digital currency.
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