The concept of a digital dollar that can be used to provide U.S. taxpayers with stimulus payments to weather the economic recession caused by the COVID-19 pandemic has once again been floated by lawmakers.
Congresswomen Rashida Tlaib (D-Mich.) and Pramila Jayapal (D-Wash.) introduced a new proposal to have the federal government issue $2,000 per month to residents by minting a pair of $1 trillion coins and using these to back the payments. The Automatic BOOST to Communities Act (ABC Act) also brings back the idea of a digital dollar, describing the concept using similar language to a series of bills introduced last month.
Under the ABC Act, Congress would authorize the Federal Reserve to create “FedAccounts,” meaning “Digital Dollar Account Wallets,” which would allow U.S. residents, citizens and businesses located in the country to access financial services.
“No later than January 1, 2021, the Secretary shall offer all recipients of BOOST payments the option to receive their payments in digital dollar wallets,” Thursday’s bill read.
The bill was introduced in the wake of ongoing issues with issuing $1,200 stimulus payments authorized under the CARES Act. The Internal Revenue Service has been sending payments to taxpayers, but glitches have prevented numerous individuals from receiving their funds – or even from being able to verify their payment status, the Washington Post reported Thursday.
The digital dollar idea first appeared in the original form of the “Take Responsibility for Workers and Families Act” introduced by House Speaker Nancy Pelosi (D-Calif.) and the “Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act” introduced by House Financial Services Committee Chair Maxine Waters (D-Calif.), envisioning a “FedAccount” system wherein the Federal Reserve – the U.S. central bank – would manage bank accounts for every resident, allowing it to directly deposit these payments.
Notably, these digital dollars are not stablecoins and do not appear to be based on a blockchain infrastructure of any sort.
The digital dollar mentions were removed from the subsequent version of the “Take Responsibility” act, and it is unclear whether Waters’ bill made much progress.
The idea was also brought up in an independent Senate bill introduced by Senator Sherrod Brown (D-Ohio), the ranking member on the Committee for Banking, Housing and Urban Affairs. While the Senate is in recess, an individual familiar with the senator’s thinking said his office still intended to pursue the legislation.
Thursday’s bill goes beyond just stimulus payments, however. The bill notes that FedAccount holders should have access to a variety of other services if it is passed, including “debit cards, online account access, automatic bill-pay, mobile banking and automatic teller machines maintained in conjunction with the United States Postal Services at its physical locations.”
Thursday’s bill was co-sponsored by Reps. Jesús García (D-Ill.), Alcee Hastings (D-Fla.), Alexandria Ocasio-Cortez (D-NY), Ilhan Omar (D-Minn.), Ayanna Pressley (D-Mass.), Bobby Rush (D-Ill.), Jan Schakowsky (D-Ill.), Nydia Velázquez (D-NY) and Delegate Eleanor Holmes Norton (D-D.C.).
The news comes just hours after the Libra Association announced it was modifying its white paper and plan for the libra stablecoin. The entity, spawned by Facebook last year, now envisions launching a series of fiat-pegged stablecoins rather than just one multi-currency-backed token.
The libra project was originally intended to help facilitate financial services for unbanked and underbanked individuals through the use of a digital transfer mechanism.
Morgan Ricks, an associate professor at Vanderbilt University who helped provide input on the original digital dollar proposals, told CoinDesk that he and his associates have "given advice at the staff level" to both House and Senate offices over the past few weeks.
"It’s great to see legislative attention to this . We think it’s a transformative idea," he said.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.