Coindesk reports today that Sherrod Brown (D-Ohio) has introduced a bill to put together a digital dollar linked to the value of the traditional fiat dollar.
“The proposed digital dollar would be operated and maintained by the Federal Reserve,” write Nikhilesh De and Zack Seward. “The Fed would be responsible for maintaining the digital wallets to support the funds, on behalf of individuals.”
De and Seward report a recent house bill was scrubbed of similar language even though top officials like Chris Giancarlo at CFTC have suggested the digital dollar would help to maintain the dollar’s importance in global economics.
The idea of a central-bank issued digital coin is not new – in many cases, national central banks want to create these assets in order to head off private sector efforts to introduce cryptocurrencies that could compete with fiat currencies.
In this case, some suggest that the digital dollar could also be used to distribute covid19 relief funds to U.S. residents and handle other kinds of transactions in a new kind of consumer and public administration environment – that’s apparently part of what’s driving retroactive support for the house effort.
“On March 22nd, the Democratic party in the U.S. House of Representatives — the lower chamber of the American legislature — put forth a new draft bill, that if eventually passed, would bring about a digital dollar to help buoy financially embattled American families,” wrote William Peaster at Blockonomi March 24. “That bill, the ‘Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act,’ would empower the Federal Reserve — the central banking system in the U.S. — to put money into Americans’ hands quickly with a new Fed-backed digital dollar system.”
Importantly, as this background shows, the digital dollar would not be a decentralized cryptocurrency, but rather, a CBDC digital coin of the type formerly proposed by various national banks.
However, the coin may share some wallet technologies with decentralized cryptocurrencies, and would probably bring blockchain awareness further into the American mainstream.
However, what reports like this one from Quartz in 2018 show that the new interest in a digital coin is a reversal for the Fed. Let’s see what develops.