During coronavirus epidemics funds are being distributed among individuals by states but the problem stands in the case of unbanked individuals. Advocates for digitizing coronavirus relief payments started working with congressional staffers hand to hand and these advocates are making the Federal Reserve understand that how the bank could potentially distribute funds to unbanked individuals quickly at this economic downfall.
Morgan Ricks, an associate professor at Vanderbilt Law School, Lev Menand, lecturer in law at Columbia University, and John Crawford, law professor at University of California Hastings, have long advocated for a digital dollar writing a paper in 2018 on the subject and their assistance has been reflected in a provision, which detailed the digital dollar in two different bills, provided by the House of Representatives. Ricks has been with the staffers since around March 17. He thinks a digital wallet with the Fed would be a relatively easy way of distributing funds.
What Ricks said is the Fed doesn’t have that retail capability right now that people would have a direct account with the Fed consisting of digital money and there wouldn’t be any other intermediary bank. Reportedly, the congress started thinking about digital currencies after last year’s libra hearings is not a surprise. The digital dollar got back to desired place with its own dedicated draft bill before the U.S. senate introduced Monday by a member of Senate Committee Sen. Sherrod Brown. But the senate version wasn’t seen by Vanderbilt’s Ricks. Brown intends to pursue the legislation currently sitting before the Senate Banking Committee currently at the height of this pandemic.
Opportunity to Unbanked
Brown said his legislation would allow every American to set up a free bank account and to help unbanked individuals access financial services, a target of many crypto projects. On the basis of the final relief bill passed by both the Senate and the House allows the federal government to send the payments only to eligible American taxpayers with direct deposit bank addresses on file with the Internal Revenue Service but those recipients having no address on file have to wait some months. The receipt of fund will be confirmed via mail. Reportedly, roughly 70 million people will actually receive a payment in the coming weeks. As per the Brown’s bill the digital dollar proposals would prevent banks offering wallets from requiring a minimum balance and provide reasonable protection against losses caused by fraud or security breaches.
There are some personalities who are yet skeptical of the use case for a digital dollar issued by the Fed, but is especially concerned with a potential rush job. They think the idea they could suddenly pivot is not realistic. Another individual said there would need to be a massive push to collect the necessary information from individuals to set up a distribution system. No national identities would be provided there meaning individuals would therefore have to register for a bank account should a digital dollar be built.