The US Congress has brought up the topic of Digital Dollar again.
What differentiates this proposal compared to the CARES Act is three fold:
- ABC Act proposes payments for up to 12 months
- Payments are to be paid through Digital Dollars through digital wallets called eCash Wallets
- Includes non-residents who have been in the US for at least 3 months (whereas CARES Act excluded non-residents from payments)
“It is a sense of Congress that at the end of the payment period, the Board of Governors of the Federal Reserve System shall develop and administer a system of Digital Dollar Account Wallets, which shall be branded as ‘‘Fed Accounts’’, and made available to all United States citizens, United States residents, and domestically domiciled businesses, along with associated services, including debit cards, online account access, automatic bill-pay, mobile banking, and automatic teller machines maintained in conjunction with the United States Postal Services at its physical locations.”
Digital Dollar scheduled to arrive by January 2021
The coveted Digital Dollar may be closer than most realize. If the ABC Act were to pass into law, Digital Dollars and Digital Dollar Wallets might become part of American lives as soon as January 2021.
“No later than January 1, 2021, the Secretary shall offer all recipients of BOOST payments the option to receive their payments in digital dollar wallets. BOOST recipients receiving their payments through in terim BOOST cards shall instead receive a Federal Reserve Account for debit cards and be given the option to sign up online for fully operational digital dollar account wallets,” ABC Act proposes.
No Fees, No minimum or maximum balances
The US government must be catching on. When a millions of dollars worth of bitcoin is being transferred for a couple of dollars in fees, the days of draconian banking practices must be coming to an end. Digital Dollar wallets will have no fees associated nor will they have any minimum or maximum balance requirements.
“Digital dollar account wallets shall not be subject to any account fees, minimum balances, or maximum balances, and shall not be closed or restricted on the basis of profitability,” confirms the document.
eCash Wallets is what they will be called
The Government has coined a name for these digital dollar cash wallets, they will be called eCash Wallets.
“The Treasury shall develop and administer a system of Digital Dollar Cash Wallets, which shall be branded as‘‘eCash Wallets’’ and made available to any eligible individual to store, send, and receive digital coins or other digital currency instruments issued by the United States Treasury as legal tender,” the document states.
Non-Residents may qualify for the payouts
CARES Act that promised $1200 to Americans excluded non-residents living in the US. Many individuals who make America as their home on Student visas (F1) or Trainee visa (J1) are considered non-residents for tax purposes, nevertheless, they usually have lived in the US going through same pains as most Americans and students.
ABC Act proposes to include non-residents within the definition of ‘eligible individuals’.
“Any nonresident alien (as defined in 7 section 7701(b)(1)(B) of such Code) who has been in the United States for more than the 3-month period beginning on December 13, 2019,” will be considered eligible individual to receive the BOOST payout.
Platinum Trillion Dollar coins
“The Secretary shall, under section 5112(k) of title 31, United States Code, mint and issue two $1 trillion platinum coins and shall further mint and issue any additional $1 trillion coins on an as-needed basis to cover any direct and indirect expenses related to the Program for the duration of the program,” the proposal explains.
This means, the US Government might end up issuing/printing as much as 3 trillion dollars in Digital Dollars to pay the US individuals monthly payouts of $2000 for a year (or more if needed.
Is the dollar really losing its value?
Will this crazy issuance of new money into the system make the dollar lose its value?
Case could be made for two scenarios.
The US could see a massive inflation and make dollar a lot less valuable than what it is now. This is what happened with Venezuela, Zimbabwe, etc.,
However, the US economy is far more resilient than Venezuela and Zimbabwe. Then we have to compare it with country like Japan which has printed a massive amount of money as well. However, in Japan inflation has not taken over the country.
The US might actually pull this off and might be able to stabilize the economy from the ill effects of the massive printing of currency. However, if other countries refuse to use dollars as global reserve – it could backfire in the face of the USA’s dominance of the global economy through its use of dollar as global reserve.
Will we see a massive inflation or deflation? We have to wait at least until the later part of 2021…it seems!
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