Stimulus Payments May Be Turned Into 'Digital Dollar' For Easier Distribution

Within the past few weeks, Democrats and Republicans have been looking into the details of a bill that, if passed, would distribute a second round of stimulus checks to Americans that have been affected by the coronavirus pandemic.

Amid the discussions, the House Financial Services Committee will look into a method to enhance the distribution to the 35 million citizens that are still waiting to receive their payments from the first stimulus payment, as reported by AS English.

Digital Dollar

A professor at Vanderbilt University Law School, Morgan Ricks, has said in the past that one method that would allow consumers to own a central bank account is through digital dollar.

Former CFTC Chair and founder of the Digital Dollar Foundation, Chris Giancarlo, however, had proposed the use of a tokenized digital dollar founded based on blockchain or distributed ledger technology (DLT).

Congressman Stephen Lynch will oversee on Thursday a hearing called "Inclusive Banking During a Pandemic: Using FedAccounts and Digital Tools to Improve Delivery of Stimulus Payments."

According to Forbes, the House Financial Services listed the notice of the hearing on their website and on the scheduled lineup of witnesses could be seen Mehrsa Baradaran a Law professor at the University of California, Chris Giancarlo, the Senior Counsel, and several other related names.

Chairwoman Waters introduced a bill that became the origin of FedAccounts. The proposal describes a digital dollar wallet as an account that is maintained by a federal reserve bank on a person's behalf.

The wallet also represents stores the funds inside an electronic device or service that could be used to store digital dollars that may be connected to a digital or physical entity. A digital dollar wallet would also be branded as a FedAccount in all account statements and other communications of the Federal reserve bank.

Also Read: Second Stimulus Check: How Does It Differ from the First Release?

The concept was initially part of the CARES Act draft but did not make it into the final phase of the act.

Two additional bills have been presented since the introduction of H.R. 6321; the Automatic Boost to Communities Act (ABC Act) and the Banking For All Act, which Forbes explained. Both acts touched the subject of FedAccounts but limited digital dollar to being a distribution mechanism rather than being a central bank digital currency.

Moving forward

The Digital Dollar Project published its first white paper last week, and the U.S. government now needs to seriously look into how to construct a digital dollar as the Chinese government already has a digital operating currency which could severely impact the value of the U.S. dollar.

In an interview with The Block, Giancarlo said that the coronavirus pandemic had pushed the boundaries for ideas of how to distribute public assistance effectively. He also noted, however, that one of the bills that had been drafter from the Democratic party includes a proposal for digital dollar.

Lynch recently introduced a bill that utilized blockchain technology to assist Strategic National Stockpile and all 50 states to be able to maintain sufficient personal protective equipment and emergency medical supplies amid the global pandemic.