North Carolina Bans Central Bank Digital Currencies: A Blow to Federal Reserve Plans

North Carolina’s General Assembly has passed a bill that prevents the state from implementing a United States Federal Reserve-issued central bank digital currency (CBDC). This decision comes after the Senate, led by Republicans, successfully overturned a veto by Governor Roy Cooper on 9 September.

The Senate's 27-17 vote just surpassed the 60% majority required to counter the Democrat governor’s veto. House Bill 690 has now become law. The House of North Carolina had earlier voted to override Cooper’s veto, with a 73-41 decision in early August.

State Rejects CBDCs as Payment, Bans Participation in Future Tests

The new legislation forbids North Carolina from accepting CBDCs as payment and prevents the state from participating in any future CBDC tests that may be conducted by the Federal Reserve. Governor Cooper had initially vetoed the bill on 5 July, following an overwhelming House vote of 109-4 and a Senate vote of 39-5 in support of the bill in June.

The Senate's most recent vote was notably closer, as 12 Democrats who had previously supported the bill chose to back Cooper’s veto instead. This time, no Senate Democrats voted in favour of the bill.

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Reactions from Industry Experts Highlight Divided Opinions

Blockware Solutions head analyst, Mitchell Askew, expressed mixed feelings about the outcome. He described the CBDC ban in his home state as "amazing," but was disappointed by the Senate vote. According to Askew, the shift in support from 12 Democrats confirmed his belief that Cooper’s veto was influenced by partisan politics.

Dan Spuller, Blockchain Association’s head of industry affairs, echoed these sentiments in a social media post, stating that Cooper’s veto "blew an opportunity" to show a united front against CBDCs in North Carolina.

Federal Reserve's Position on CBDCs Remains Unchanged

Despite these developments, the Federal Reserve's stance on CBDCs remains consistent. Chair Jerome Powell stated on 31 July that there has been no significant progress towards adopting a US-issued CBDC. He reiterated this position during a federal Senate Banking Committee hearing in March, indicating that the US is far from recommending or adopting any form of CBDC.

In response to these concerns, the US House passed the CBDC Anti-Surveillance State Act in May, and a corresponding bill has been introduced in the Senate by Senator Ted Cruz.

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