After the outbreak of COVID-19, the condition of the country’s economy has dropped. As days pass, the drop in the market keeps on increasing. In order to save the economy of the country, Congress has been looking upon to pass a stimulus bill that will make the dollar digital.
This stimulus bill is said to save the economy of the country from the ongoing pandemic. The latest offer from the House Democrats includes the making of the dollar, digital which will be dealt with the help of digital dollar wallets.
The decision of doing so is going to affect the already existing cryptocurrency and blockchain industry, especially for those making use of central bank digital currencies globally.
The bill establishes a digital dollar, which it defines 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).
It will be made sure that the digital dollar is identified as a digital wallet or account and is looked after by the 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 digital or physical identity.’
This idea was launched taking into consideration both Speaker Pelosi’s ‘Take Responsibility for Workers and Families Act’ and the ‘Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act (H.R. 6321),’ introduced by Chairwoman Maxine Waters of Financial Services Committee
According to one of the mandatory criteria of the Act, all member banks will have to create a ’pass-through digital wallet’. This will be done for all the customers that meet the eligibility criteria. Member banks will include all the banks that already are a part of the Federal Reserve and regulated by the Fed. On the other hand, ‘Non-Member’ state banks would be those that are not members of the Federal Reserve and regulated by the FDIC. These nonmember banks could offer pass-through digital dollar wallets as well.
A digital dollar wallet to any U.S. person who has eligibility for the payments will be made available by The Federal Reserve Banks. On the other hand, the U.S. Postal Service would look into helping the individuals who do not have any association with a bank and/or those without proper ID to establish their identity in order to provide a digital dollar account. ATMs would be set up for easy access and availability of funds.
How is Public Response?
Founder of fintech advisory firm Gattaca Horizons and former chief innovation officer at CFTC, as well as a founding director of the Digital Dollar Project, Daniel Gorfine in a statement to Forbes said,
It is worth exploring, testing, and piloting a true USD CBDC and broader digital infrastructure in order to improvise our future capabilities and resiliency, but it is also important that this effort does not delay the government from deploying critical emergency funds using existing channels during this crisis. While the crisis highlights the importance of upgrading our financial infrastructure, broadly implementing a CBDC will require time and thoughtful coordination between the government and private sector stakeholders.’
Carmelle Cadet, Founder, and CEO of EMTECH, a modern central bank technology, and services company, is a technology provider in the world’s first live retail CBDC with the Central Bank of Bahamas called the Sand Dollar. She has recently started a new initiative in the U.S. called ‘Project New Dawn’ which makes sure that the unbanked and underbanked population get to use economic stimulus payments. According to an FDIC report in 2017, 63 million people were identified to be unbanked and underbanked in the U.S. She says, ‘If checks are the form of payment, the stimulus is not going to reach many of them. That would be approximately $100B underutilized of stimulus for lower-income householders.’