A group of U.S. lawmakers has introduced new legislation that would create a %DigitalDollar through the U.S. Treasury Department rather than the U.S. Federal Reserve.
Representatives Stephen Lynch (D-Mass.), Jesús Chuy Garcia (D-Ill.), Ayanna Pressley (D-Mass.) and Rashida Tlaib (D-Mich.) introduced the “Electronic Currency And Secure Hardware Act” (ECASH Act) to direct the Treasury Secretary to develop and issue an electronic version of the U.S. dollar.
The digital dollar, as defined in the bill, would be a bearer instrument that people could hold on their smartphone or a card. The system would be token-based, not account-based, meaning if someone were to lose their phone or card, they would lose the funds. It would be akin to losing a wallet with dollar bills in it.
This electronic dollar would be deemed legal tender and be functionally identical to a physical American dollar. This form of e-cash would support peer-to-peer transactions and would support fully anonymous transactions as well.
The new legislation differs from other proposals for a digital dollar that are based on %Stablecoins or other decentralized ledger tools. %Blockchains are designed to track every transaction, and any transaction could be therefore tied to the sender and receiver.
The proposed legislation could serve people who are unable to hold bank accounts because of minimum balance requirements or those who don’t trust banks because banks may charge fees or freeze funds, say the lawmakers who introduced the bill in Congress.
Until now, it was assumed that a digital dollar would be created through the U.S. Federal Reserve, the country’s central bank. Developing a digital dollar through the Treasury is a new concept.