House stimulus bills envision ‘digital dollar’ to ease coronavirus recession

Under two draft bills shared last week, meant to shore up the U.S. economy due the coronavirus, the Federal Reserve could use a “digital dollar” and digital wallets to send stimulus payments to Americans. Both bills include identical language around the digital dollar suggestion.

“The term ‘digital dollar’ shall mean 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),” the bills read.

Under the bills, Americans would access funds deposited by the government through “pass-through digital dollar wallets,” with recipients receiving a pro rata share of a pooled reserve balance” held by Federal Reserve member banks.

Why it matters:

• To say the least, while the digital dollar provision may not make it into either final versions of the bills, congress is getting creative as it looks to come up with a fiscal solution to combat the economic effects of the coronavirus pandemic.
• The solution could be the biggest validation of cryptocurrency technologies to date if it is indeed part of a solution to a high stakes nationwide economic problem.