Multiple senators have introduced ideas for how a digital dollar could be included in COVID-19 relief and stimulus packages. John Collins, partner at FS Vector, an advisory firm assisting firms like fintechs, reg- techs and financial institutions, discussed some of the interesting points.
(34:48) “There really were three main proposals that were thrown out there. And they were part of larger bills from those individual legislators…They all included these three digital dollars or something that looked a lot like a digital dollar but what that actually meant and how it would be implemented were different in each one.”
Collins explained that the Rep. Maxine Waters proposal called for the creation of a digital dollar wallet that would be created by the Federal Reserve. A subset of the digital dollar definition described it as an “electronic unit of value redeemable by any eligible financial institution as determined by the Fed.” Teana asked John if this could be an obvious candidate for a stablecoin, JPM Coin or another crypto asset, in response to which he said:
(39:00) “I think certainly if you have a definition that says electronic unit of value redeemable by a financial institution…that could be any number of different things…I don’t know if this was just a, not a drafting error but something that involved the drafting that led them to have a broad definition to allow perhaps room for the Fed or Treasury to implement it in some way. I’m not sure what the exact intent was on the part of the Congresswoman. But that definition in my view and in the view of a number of others is very open to other digital currencies.”
The timing of a central bank digital currency popping up in one of the COVID-19 stimulus packages is less clear.
(43:17) “I don’t expect it to be in anything that happens over the next year. I do think once we are back to somewhat of a sense of normalcy, there’s going to be a revisiting of a lot of different things in the economy in the financial system, especially if we have a change in the White House. And so I would be very surprised if these ideas in some form or fashion do not continue some kind of momentum whether it’s a part of a task force or continued conversations among industry to present these solutions. I do think it is certainly the continuation and really the beginning of this conversation that will happen over the next several years.”