Democrats push for digital dollar to aid coronavirus fight

24 Mar 2020

US Dollar Bitcoin

Democrats within the U.S. House of Representatives are seeking to launch the digital dollar to simplify payments to U.S. citizens outside the traditional financial system.

The legislation, a draft version of which was unveiled on Monday, puts forward the creation of digital wallets for U.S. citizens within the so-called “Direct Stimulus Payments for Families” section, reports Cointelegraph.

The bill establishes a digital dollar, which it describes as “a balance expressed as a dollar value consisting of digital ledger entries that are recorded as liabilities in the accounts of any Federal Reserve Bank or ... an electronic unit of value, redeemable by an eligible financial institution (as determined by the Board of Governors of the Federal Reserve System).”

Additionally, a digital dollar wallet is identified as “a digital wallet or account, maintained by a Federal reserve bank on behalf of any person, that represents holdings in an electronic device or service that is used to store digital dollars that may be tied to a digital or physical identity,” according to a Forbes report.

The “Direct Stimulus Payments for Families” section proposes monthly payments of $2,000 to each adult earning under $75,000 a year, when the payments would then reduce. These payments would continue until the economy recovers.

Federal reserve member banks would be required to maintain digital dollar wallets for all clients, even though the proposal does have the option of providing cheques.
The bill, reportedly originating from the office of Speaker of the House Nancy Pelosi, purports to distribute over $1.8 trillion. 

Daniel Gorfine, founder of fintech advisory firm Gattaca Horizons and founding director of the Digital Dollar Project told Forbes: “It is worth exploring, testing, and piloting a true USD CBDC and broader digital infrastructure in order to improve our future capabilities and resiliency, but it is also important that this effort not delay the government from deploying critical emergency funds using existing channels during this crisis. 

“While the crisis underscores the importance of upgrading our financial infrastructure, broadly implementing a CBDC will require time and thoughtful coordination between the government and private sector stakeholders.”