The Democratic wing of the United States House of Representatives is pushing for a digital dollar solution in order to assist citizens in the midst of the coronavirus pandemic.
The idea put forward would see the Federal Reserve managing digital wallets under a “Direct Stimulus Payments for Families” portfolio.
For U.S. citizens earning less than $75,000 a year, they would receive a payment of a $2,000 for the first month.
Those earning above the $75,000 bracket would receive a smaller, yet to be specified amount.
According to the proposed bill, a digital dollar and a digital wallet is defined as follows:
“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).
”On the other hand, the proposed digital wallet is “a digital wallet or account, maintained by a Federal reserve bank on behalf of any person, that represents holdings in an electronic device or service that is used to store digital dollars that may be tied to a digital or physical identity.”
This version of the bill originated from the office of the House of Representatives Speaker Nancy Pelosi.
It is believed that if the bill goes through, it could underline America’s intention in forming a central bank-backed digital currency.
Debit cards loaded with $2000
In a document released by Democratic Congresswoman Rashida Tlaib, it is stated that the “Automatic BOOST to Communities Act would immediately provide a U.S. Debit Card pre-loaded with $2000 to every person in America.
“Each card would be recharged with $1,000 monthly until one year after the end of the Coronavirus crisis.”
Under Tlaib’s proposal, a family of four would receive $8,000. At least for the first month. After that it would assumedly drop to $4,000
Included is aid for undocumented residents, and ‘temporary visitors whose stay exceeds three months’.
Americans living abroad and in ‘unincorporated territories or protectorates’ would also qualify.
How will people get access to their digital dollars?
The U.S. Treasury Bureau of the Fiscal Service would provide pre-paid cards which would be distributed as debit cards.
These debit cards could be used at regular ATMs. They would also be valid at point-of-sale terminals and for online shopping.
How will people receive their cards?
Direct mail is the basic proposed option.
Another possibility is for people to collect their cards from any FDIC-insured bank or from temporary distribution centres.
For people in the ‘at-risk’ bracket, such as the elderly, homeless and disabled, an emergency responder corps would perform the deliveries.
Democrats and Republicans at odds
The problem at the moment is a disagreement over the draft details between the Democrats and Republicans in the House of Representatives.
* Disclaimer: Speaker Pelosi’s updated final version of the Democrats’ stimulus package no longer includes the Digital Dollar proposal. However, Chairwoman Waters of the House Financial Services Committee still refers to the language mentioned in the original bill.
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