The Coronavirus pandemic has revealed a need for digital banking in the United States. When tasked with the issuance of economic stimulus checks to U.S. residents, the House Financial Services Committee is considering alternative delivery options to U.S. workers, with a digital dollar delivery system being one highly considered option.
The Task Force on Financial Technology, a branch of the House of Financial Services Committee, held a virtual hearing this Thursday, titled, “Inclusive Banking During a Pandemic: Using FedAccounts and Digital Tools to Improve Delivery.” This hearing examined the potential implementation of FedAccounts, which are digital dollar wallets held by the Federal Reserve containing the digital dollar holdings of any user, according to the Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act.
Pioneered by Chairwoman Maxine Waters, Representative of California, and Congressman Stephen Lynch of Massachusetts, this new effort is enormous for the blockchain and digital currency world as discussions of a digital payment mechanism will open the door for talks of a U.S. central bank digital currency. Although the FedAccounts are meant to be a delivery system for the stimulus checks rather than an actual digital currency, creating a distribution platform for a digital dollar shows the central bank that a digital currency has the potential to make financial processes and transactions significantly easier.
The digital dollar clause was part of the draft of the Coronavirus Aid, Relief, and Economic Stimulus Act, or the CARES Act, but it did not make it into the final version. While the clause did not pass, it gained the attention of other American Congressmembers, as two new bill proposals followed the failed attempt: The Automatic Boost to Communities Act and the Banking for All Act.
With notable Representatives and Congressmembers pushing for the digital dollar in the face of the Coronavirus pandemic, the proposal for an electronic distribution platform greatly provokes the opportunity for a central bank digital currency to arise.
By Liam McDonald