The Marriner S. Eccles Federal Reserve building in Washington, DC.
House Majority Whip Tom Emmer (R-Minn.) has introduced the Anti-CBDC Surveillance State Act, which would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC). The bill, which has gained strong support from credit union organizations, aims to protect financial privacy and prevent government overreach.
“Whip Emmer’s legislation protects consumer privacy and financial stability by preventing the Federal Reserve from issuing a CBDC,” Carrie Hunt, America’s Credit Unions' chief advocacy officer, said. “A CBDC could disrupt credit unions and retail deposits, and expand government. The risks of a CBDC outweigh any potential benefit.”
Mara Humphrey, president/CEO of the Minnesota Credit Union Network, echoed these concerns: “Thanks to Congressman Emmer for authoring legislation that protects credit unions and their members – and the financial system at large – from the unintended consequences of a central bank digital currency issued by the Federal Reserve.”
The bill followed a January executive order by former President Donald Trump, which created the President’s Working Group on Digital Assets Markets and prohibited the federal government from developing a CBDC.
In May 2024, the House passed the CBDC Anti-Surveillance State Act in a 216-192 vote, but the bill died in the Senate.
Potential Risks to Credit Unions
Credit unions have raised concerns that a CBDC could negatively impact traditional banking in several ways:
- Deposit Disintermediation – A government-backed digital currency could shift funds away from credit unions, reducing their ability to provide loans and financial services.
- Liquidity Challenges – Members might withdraw deposits to store them in CBDC wallets, creating funding shortfalls for credit unions.
- Higher Operational Costs – To remain competitive, credit unions may need to increase interest rates and enhance security measures, leading to higher costs.
Despite concerns, some experts argue that a CBDC could bring certain advantages. A 2022 report published by the Madison, Wis.-based Filene Research Institute listed numerous advantages for credit unions and CBDC:
- Faster and more secure transactions, reducing processing times and fraud risks.
- Greater financial inclusion, enabling underbanked individuals to access digital banking services.
- Enhanced fraud prevention, with digital ledger technology improving transaction transparency.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
