North Carolina House of Representatives overturns governor’s veto of bill banning CBDC

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A bill that would effectively ban a United States central bank digital currency (CBDC) in North Carolina is back on the table after the lower chamber of the U.S. state’s General Assembly overturned the Democratic Governor’s veto.

The anti-CBDC act has now passed to the Senate Committee on Rules, and if they follow in the footsteps of their House colleagues, it will become law.

The bill would prevent state agencies and courts from accepting “payment using central bank digital currency” and ban them from participating in CBDC tests “by any Federal Reserve branch.”

It was vetoed by North Carolina’s Democratic Governor Roy Cooper on July 5. Cooper explained his decision by saying the bill was “premature, vague and reactionary and proposes an end result on important monetary decisions that haven’t even been made yet.”

Before being vetoed, the bill had resoundingly passed both chambers of the North Carolina Assembly in a vote of 109–4 in the House on June 26, the day after an equally unambiguous 39–5 vote in the Senate.

Last week’s veto override vote wasn’t quite as comprehensive. Nearly all House Democrats voted in contradiction to their supportive position in June, with a three-fifths supermajority eventually approving the override, as required by law.

Representative Mary Belk (D-NC), who voted against the legislation and the override of the veto, said the legislation wasn’t necessary and compared a CBDC to other forms of digital currency.

“First, let me point out that the United States does not have a central bank digital currency,” Belk said. “It is a concept that the Federal Reserve Bank is studying in an effort to offer businesses and consumers an option to make digital transactions with confidentiality, with security and predictability.”

Adding that, “there’s enough space in the digital economy for everyone. There’s no reason to limit our choices before we know what they are.”

While the Federal Reserve has acknowledged it is exploring the potential of CBDCs, it has also consistently stated that it does not intend to impose itself on digital asset policy through a CBDC.

In March, the central bank’s Chair, Jerome Powell, told a Senate Banking Committee hearing that the U.S. was “nowhere near recommending – or let alone adopting – a central bank digital currency in any form.” More recently, after the Federal Open Market Committee meeting on July 31, he stated that “there’s really nothing new going on at all” with a U.S. CBDC.

However, the Fed’s assurances might end up being moot, as legislation to prevent a U.S. CBDC is already working its way through Congress.

In May, the U.S. House of Representatives passed the CBDC Anti-Surveillance State Act, which would amend the Federal Reserve Act of 1913 to prohibit Federal Reserve banks “from offering certain products or services directly to an individual, to prohibit the use of central bank digital currency for monetary policy, and for other purposes.”

A companion bill has been introduced to the Senate by Senator Ted Cruz.

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