The United State of America, home to the strongest economy, decided to revisit the digital dollar project. There were deliberations regarding the solutions for the upgrade of the country’s financial infrastructure. The United States digital dollar project was carried out by the Senate Banking Committee before a selected audience.
The U.S banking committee sought counsel from Paxos CEO, Charles Cascarilla, a financial researcher and professor at Duke Nakita Cuttino, and former CFTC Chair, Chris Giancarlo, as witnesses.
Moreover, Charles Cascarilla in clear terms stated how stablecoins operate and their advantages in modern finance. He said, “Stablecoins address the antiquated plumbing of our financial system.” Also, Duke Cuttino said, “We need to address the frictions that exist with the payments system now.”
However, Cuttino provided the greatest insight on the specific concerns of the unbanked, “Of course with innovation there comes the reduced cost.” Given the focus of her research, Cuttino made it clear that there should be low transaction costs for any proffered solution. Recall, that the early days for Bitcoins, the transaction cost was extremely high — and remains extremely high.
How Does Digital Dollar Drive Financial Inclusion
Giancarlo was asked to explain the impact of digital dollars with financial inclusion, by Patrick McHenry, a principal member of the Financial Services Committee. He said, “It’s about on-ramps into the financial system and making them as simple and accessible as possible.”
Furthermore, the current champion of the Digital Dollar Project, Giancarlo had this to say about the project. He said:
“We began this journey nine months ago, long before COVID was even a concern, long before the insufficiencies of a lot of our payment systems were as broadly noted and acknowledged as they are now. More so, something as important as upgrading the U.S. dollar needs to be done thoughtfully, deliberately.
Furthermore, “But we need to start now. And if COVID response is the catalyst to starting now, if China’s BSN is the reason to start now, if the Riksbank of Sweden is the reason to start now, if Bitcoin is the reason to start now — all of those pretexts are fine and all of them may appeal to a different constituency, but they say the same thing and that is we’ve got to get started. But we can’t rush it.” he said.
The committee in charge of this bill wants to use the FedAccounts to manage digital currencies during the pandemic. They want the bank accounts managed by the Federal Reserve to issue stimulus payments. Also, the U.S. government has issued one round of payments by check, but only individuals who have filed taxes within the last two years received them. This is the idea behind the digital dollar.
Furthermore, the U.S. residents could receive these funds in a snap, instead of waiting for a piece of paper mailed across several weeks by the Internal Revenue Service (IRS).
Also, because of the intense scrutiny and examination of the FedAccounts by America’s Congressional Fintech Task Force. They said the use of digital dollars in expanding financial reach in the United States is indeed a welcome development. Additionally, U.S. citizens would be gifted a digital wallet, maintained by the Federal Reserve, called a FedAccount.
Therefore, all hands are on deck in making this big move see the light of the day. The sooner the United States adopts the use of this digital dollar, the better. However, this is not just for the pre and post-COVID-19 era, but for the long-term commercial and financial inclusion.
What You Need To Know About Digital Dollar
The United States digital dollar is a dollar, not just a representation of the dollar. It will have the same legal status as the physical cash in your wallet.
One of the frameworks under consideration, by the U.S government, is going to birth a Central Bank Digital Currency (CBDC). This digital currency would be transferred between users and recorded in a public ledger, as well as mined through the blockchain protocol. It will please you to know that this is not a decentralized blockchain-based token. It is a debt notation on a centralized ledger maintained by the Federal Reserve.
However, this digital dollars would be stored in a distributed database via the internet. Also, it will be within stored-valued cards or virtual files on an electronic computer database.