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U.S. Pushes For Digital Currency For Immediate Stimulus

Digital Currency

The world’s governments are rushing to implement stimulus packages in order to prevent a recession (or depression) at the hand of the Coronavirus pandemic.

 

In the US, the Trump administration and members of Congress are negotiating a substantial impetus package to inject into the economy to ease the impacts of the pandemic.

 The U.S. Senate is negotiating a nearly $2-trillion emergency bill that hopes to soften the economic blow, but Democrats are pushing back against an initial Republican draft of the bill.

That means that so far, we have no stimulus package.  

House Democrats have put a few of their own proposals on the table, and they include the creation of a "digital dollar" and a "digital dollar wallet" to be distributed to all qualified U.S. residents.

Congresswoman Maxine Waters, a member of the Democratic Party, is proposing a “digital wallet” and “digital currency” to be issued to facilitate the payments in order to get cash payments quickly to U.S. citizens.

A lengthy draft bill titled the “Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act,” would provide monthly direct payments of up to $2,000 per eligible adult and $1,000 per child for as long as the crisis and potential recession may last.

The bill will also give the “unbanked” access to their funds through a new digital wallet they can open at a financial institution.  This would be the first instance of a central bank digital currency in the United States. It also makes it clear there would be no banking charges associated with the plan. 

As for who these "qualified individuals" are in this digital dreamland, the draft notes that it’s everyone except "any nonresident alien individual”.

A Federal Deposit Insurance Corporation report from 2017 shows that 6.5% of the U.S. households were "unbanked”, meaning that no individual in the household has a checking or savings account. Another 18.7% of households were categorized as “underbanked”. 

This new virtual USD would be used for providing stimulus payments and nothing else. This isn’t a plan to create “cryptocurrency” or a “crypto wallet”, despite the fact that many pundits have rushed to claim that the U.S. is turning to cryptocurrency in a time of crisis.

The move would, however, be viewed as positive sentiment towards cryptocurrency, and it could open up some new doors. It’s this kind of news that typically gives a nice sentimental boost to bitcoin. 

The Federal Reserve bank would be in control of the digital wallets. According to the bill, the payments could be done in two ways: either as a dollar balance made up of ledger entries of a Federal Reserve bank, or as an electronic unit of value that can be redeemed by financial institutions.

But there are multiple proposals on the table--so many that the American public is probably wondering if anything will be passed in time. 

House Speaker Nancy Pelosi unveiled her $2.5 trillion spending bill, which also calls for a digital dollar and wallet, and includes measures to support homeowners and renters and $10,000 in loan forgiveness for student borrowers.

Congresswoman Rashida Tlaib has proposed giving to every person in America a U.S. Debit Card preloaded with $2,000 and recharged with $1,000 monthly until one year after the end of the Coronavirus crisis.

Elsewhere, Germany’s government agreed on a package worth up to $800 billion to mitigate the damage of the coronavirus outbreak.   

Spain unveiled a $220 billion rescue package with additional measures that the government would provide all capital necessary to prevent companies from going bankrupt. The United Kingdom will back an initial $400 billion in loans for companies. Australia passed a $189-billion coronavirus economic rescue package.

On a global scale, based on what the governments have already announced, stimulus packages could grow to more than $10 trillion.

By Anes Alic for SafeHaven.com

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