Amid COVID-19 global pandemic, which has created economic crisis across nations, including the United States, the US House of Democrats has drafted two new proposals, including the creation of a Central Bank Digital Currency (CBDC) to send payments to qualified individuals.
The Coronavirus Stimulus Bill – “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),” was introduced by the House speaker, Nancy Pelosi.
The bill introduced the creation of a digital dollar similar to a CBDC that utilizes the blockchain. However, no talks have been made whether the digital dollar will rely on the distributed ledger technology.
The digital dollar, according to the bills, is “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).”
Eligible individuals in the country will receive the digital dollar through a digital dollar wallet, which the bill also defined 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 used a digital or physical identity.”
The digital dollar wallets will be made available to all qualified individuals by the Fed who will also serve as an overseer for the digital dollar wallets.
Fed member banks are expected to have a “pass-through digital dollar wallet” for every individual that is qualified for the stimulus package. Although, none member banks can also apply to offer the pass-through digital dollar wallets.
More so, unbanked individuals who are also eligible for the package will be provided with digital dollar accounts by the U.S. Postal Service and ATMs will be established at strategic locations to enable the individuals to receive their funds.
This bill, if passed, will help individuals to scale through the shutdown of businesses which has resulted in an increased rate of unemployment in the country.