U.S. Lawmakers Call for Digital Dollar: Blockchain for Financial Inclusion
A central bank digital currency could enable states to support their underbanked citizens. In the wake of the corona-crisis, U.S. lawmakers have now suggested a digital dollar. How the crisis boosts blockchain adoption.
The U.S. government is planning an extensive financial stimulus package to tackle the corona-crisis. As part of these efforts, House Democrats have presented a draft bill that included, among other things, a “digital dollar.” Although this proposal was ultimately excluded from the final bill, it shows that blockchain becomes increasingly relevant, now more than ever before.
Digital dollar: a truly inclusive stimulus package
The first draft of the stimulus package included the creation of a “digital dollar” and “digital dollar wallets.” The U.S. Federal Reserve should issue the digital dollar and make the wallets available directly to private individuals.
Additionally, all of the Fed’s member banks should set up “pass-through wallets” for their customers, who could then directly access government support. Banks regulated by the FDIC could join the system voluntarily. Companies and private individuals could thus receive digital dollars both directly from the central bank and the respective commercial banks. For the underbanked parts of the population – people without a bank account, for example, because they do not have an ID card – the U.S. Post Office should provide digital dollar wallets and set up ATMs.
Such a system would have made the U.S. the first major economy to create a state-owned digital currency infrastructure. Although this infrastructure would initially be limited to the stimuli package, in the long term, it could support a full-fledged central bank digital currency system. It would be a prototype, setting the stage for even more exciting things to come.
The discussion continues: a new proposal is already on the table
Even if the digital dollar did not make it into the final bill, it’s not off the table. Senator Sherrod Brown released another proposal almost identical to the previous provisions.
Brown’s proposal includes “FedAccounts” for citizens where they can receive money from the government, process payments, and make cash withdrawals. These accounts should be accessible through both commercial banks and post offices.
“My legislation would allow every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money,” Brown said.
The call for a digital dollar supports the idea that the corona crisis will massively accelerate digital progress. Blockchain technology, and digital currencies in particular, will benefit from it big time.