Digital Dollar Foundation: America Needs Real "Digital Dollars"

Author: clear air

The silent Digital Dollar Project Foundation updated its official website on March 27 to discuss the "digital dollars" plan that has appeared in the draft economic stimulus package recently proposed by the US Democratic Party. The differences of an item are explained.

"This approach (referring to the Digital Dollar Plan in the Democratic Party's draft) is very different from what is currently being done by (our) 'Digital Dollar Project' … The 'Digital Dollar Project' is working on design options and is preparing to The United States has introduced a central bank digital currency in the form of a token …. this will be a new form of central bank currency issued by the US Federal Reserve . "

Comparing the description of the foundation and the draft of the Democratic Party, the two projects called digital dollars are indeed different, but there are some connections:

1. The Digital Dollar program of the Democratic Party is a temporary emergency measure .

The main purpose of this draft proposed by the Democratic Party is to solve how to open a fast channel between government departments and rescued individuals, and put economic assistance in place as soon as possible.

Judging from the relevant contents of the draft, because of the urgency of the situation, the proposed concept of the digital dollar and the payment framework concept are very rough. Whether it is digital currency or electronic cash, how to distinguish the functional roles of central banks and commercial banks, and how to solve operating costs are not clear . There are also some administrative requirements, such as requiring member banks not to stop or restrict digital dollar service due to profitability. In addition, to complete the establishment and testing of a new infrastructure in a short time, each bank participating in the plan must set up an independent institution to separate the assets and liabilities managed by the digital dollar from the original institution. This is undoubtedly the night of the night. Tan.

2. The "digital dollar" project promoted by the Digital Dollar Foundation may be more in line with the direction of future digital currencies .

Former U.S. CFTC Chairman Giancarlo put forward some ideas about the "digital dollar" project in the second half of 2019: "A blockchain agreement approved by the government, created and maintained by an independent non-governmental organization, but by banks and others Trusted payment organization management. The cash entering the system will be exchanged for digital dollars on the blockchain, and the cash will be stored in a special escrow account maintained by the Federal Reserve. "These references make people feel that the digital dollar project is just another The stablecoin is just that instead of using multiple fiat currencies as asset support like Libra, only the US dollar is chosen.

By the beginning of this year, the above-mentioned assumptions have been expanded as follows: digital dollars are supported by the US dollar, issued by the Federal Reserve, parallel to cash and fully interchangeable, with programmability and controllable anonymity, using a two-tier mechanism, which can be used for retail, Wholesale and international payments. It also emphasizes that digital dollars do not preset technical routes, and it is possible to adopt blockchain, DLT and other new technologies as needed . These are in line with the characteristics of central bank digital currencies discussed internationally. The Foundation believes that the Digital Dollar program of the Democratic Party is essentially electronic cash, and their digital dollar project is the real central bank digital currency, which represents " the third form of central bank currency except cash and central bank reserves ."

Third, the failure of the Democratic Digital Dollar Program has provided an opportunity for public-private cooperation.

The author mentioned in some other articles that the U.S. official has always been conservative and cautious about the innovation of payment instruments and the development of CBDC. If it is not the action of Libra, Fed officials rarely talk about CBDC. This is mainly the American overlord The mystery of currency status is caused by self-confidence. During this new crown epidemic, the government is also planning to use the method of issuing checks by the state tax department more than a decade ago to pay benefits, which cost money (printing, processing, and mailing checks) and time, and it is difficult to say whether the physical delivery will be infected with the virus. This status quo differs too much from the image of a big tech country as people imagine. The Digital Dollar plan hurriedly proposed by the Democratic Party, although very immature and difficult to realize, but the Digital Dollar Foundation has seen the opportunity to promote its own projects from this failure.

The Foundation is currently recruiting and recruiting 22 new advisory members, including former Fed, Goldman Sachs and Accenture executives, and is preparing to publish a white paper on the project within the next two months. Now this opportunity is just right, indicating that the current payment system and currency form of the central bank are facing great challenges in the digital age, and the need for renewal and reform is urgent. The foundation has expressed its willingness to assume the responsibility of “convening thought leaders and participants in the private sector and proposing possible models to support the public sector”, and working with the government and other stakeholders to discuss how digital dollars can be used as legal tender in a specific environment- For example, the epidemic now works.

In the discussion of the characteristics of CBDC, the role of CBDC in man-made disasters seems to be rarely discussed, because the CBDC concept has only appeared since 2015, mainly considering its impact on cash, payments, monetary policy, financial stability, etc. under normal circumstances. influences. Unexpectedly, a plague came, and traditional payment methods were powerless. The issue of disaster relief for CBDC came before the U.S. government and R & D institutions in various countries. Although it is unlikely that CBDC will immediately enter the field of circulation immediately, it is estimated that affected by this, countries The research and development of CBDC will be accelerated, and maybe the CBDC will play a role in the next pandemic-of course, we want to see the advent of the CBDC, not the plague.