The Coronavirus is a big threat to the health system of the United States. Besides that, many Americans are at risk losing their jobs and income. To help these people, the Democratic Party is looking into the possibility of giving them a (digital) income on a monthly basis. What does this mean exactly?
New task for the Federal Reserve
Nancy Pelosi is a famous member of the House of Representatives. She has now proposed a bill to give the American people digital dollars. The Federal Reserve, the central bank of the United States, has the task to manage this money.
Payments until economy recovers
Pelosi’s document is 1119 pages long. It’s a long, but interesting read that describes how the United States should solve the Corona crisis in financial terms. The document suggests ‘Direct stimulus payments for families’. This means 2000 dollars a month to every adult who earns less than 75.000 dollars a year. These payments will continue until the economy recovers.
Electronic unit of value
After 313 pages the Democrats make clear how to make these stimulus payments possible: in the form of digital dollars. We read that ‘an electronic unit of value, redeemable at an eligible financial institution (determined by governor of the Federal Reserve System) must help the American people.
Americans who need this help receive a digital wallet that is maintained by the Federal Reserve. Perhaps you’re part of this group. In order to be eligible, you must be able to identify yourself. After this process you can use the service.
Digital dollar becomes stablecoin
2020 is not only going to be the year of Corona. It also seems that the digital dollar is going to become a stablecoin with a value directly linked to the dollar. As a result, the digital dollar looks like a Central Bank Digital Currency. Simply said: a cryptocurrency issued by a central bank. However, American citizens can also exchange the dollars at other financial institutions.
Negative influence on your privacy
As an American citizen you should be very careful when you decide to use this cryptocurrency. It can have a negative influence on your privacy. Anthony Pompliano, founder of Morgan Creek Digital Assets, told more about this initiative in an e-mail. He said that this initiative from the Democrats is not without risk because the government’s move to a digital dollar can drastically increase financial supervisory capabilities.
Tracking all your transactions
If supervisory capabilities increase, the government will be able to track all transactions. If this initiative becomes reality, the government can easily track of who receives the money, when they have received it and what they have done with that money’.
‘Inform yourself about financial privacy’
Pompliano also wrote that as an American citizen you have to inform yourself about financial privacy and get used to taking actions to preserve your personal freedom. The founder of Morgan Creek Digital Assets does find it interesting that the digital dollar is released with a digital dollar wallet. ‘The use of digital wallets will only increase the adoption of bitcoin’, he concludes.