The U.S Democratic party has proposed a draft bill in the House of Reps to create a Fed run digital dollar to boost the economy amid the Coronavirus pandemic. According to this proposed legislation, stimulus funds to help U.S citizens during these uncertain times can be channeled via digital wallets and accounted for by the Federal Reserve.
The bill comes at a time legislators and regulators across the world are acting swiftly to counter the economic downturn. Dubbed ‘“Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act,” & “Take Responsibility for Workers and Families Act”; this initiative if passed by House will see qualified persons receive $1000 & $2000 for minors and adults respectively. Ideally, U.S citizens who earn below $75,000 annually are likely to receive support till the economy recovers should the bill go through.
The Digital Dollar Proposal
As mentioned earlier, the bill proposes a digital dollar ecosystem to channel payments. This concept sounds pretty similar to digital assets but the bill does not suggest any use of blockchain tech or cryptocurrencies. Instead, the Federal Reserve should maintain a digital wallet for individuals; the bill reads;
“A digital wallet or account, maintained by a Federal [R]eserve 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.”
The bill also proposes ‘pass through digital dollar wallets’ which will facilitate extra liquidity based on the reserve pools of regulated banks. Basically, the Fed and the banking ecosystem would have to liaise in the provision of digital wallets and cutting the service costs for U.S consumers.
Other Bills on Economic Sustainability & Recovery
Republicans have also tabled a proposal to deal with the economic effects of COVID-19, the GOP reps spending bill involves a $500 billion grants initiative. This has however been shot down by the Democrats who cited transparency and accountability issues if the funds are to be allocated to corporations.
Michigan’s, Rep Rashida Tlaib, also proposed the ‘Automatic BOOST to Communities Act’. Her idea is for the government to provide American citizens with prepaid cards with an initial $2,000 followed by $1,000 payments till the economy bounces back. The funds on these cards should in turn be paid for by the Fed through its monetary channels and instruments.