- A second proposal for a digital dollar has been published
- Congressman Jim Himes outlined his vision for a CBDC controlled by the Federal Reserve
- The paper is in contrast to the ECASH system put forward in March which sees The Treasury in control
A second vision for a digital dollar has been aired following the publication of a whitepaper from congressman Jim Himes. Himes (D-CT) released the whitepaper yesterday under the title Winning the Future of Money: A Proposal for a US Central Bank Digital Currency. The proposal is supportive of Congress’ move to authorise the Federal Reserve to issue a Central Bank Digital Currency (CBDC) in contrast to the ECASH bill put forward in March which entrusts the task to the Treasury.
Digital Dollars Offers “Degree of Safety” Over Existing Stablecoins
Himes sets out his stall early on, claiming that a digital dollar would have significant benefits over privately issued stablecoins:
…most notably the ability to be backed by the full faith and credit of the U.S. government, like traditional cash, and would provide holders with a degree of safety that may not be offered by privately issued stablecoins because of the risk associated with sponsors’ reserves.
Himes adds that citizens who may be hesitant to use other cryptocurrencies due to price volatility, possible digital security conflicting regulatory concerns might be more inclined to use a CBDC issued directly by a “trusted central bank” and that holds the same purchasing power as physical cash.
Himes Favours Fed-controlled CBDC
Himes says that his digital dollar would, like the existing U.S. dollar, be “a liability of the
Federal Reserve”, which is in contrast to the proponents of the ECASH bill who say that putting the Fed in charge would erode the inherent privacy associated with a physical dollar bill. Instead, they say, the Treasury should issue the digital dollar and should not track its usage in any way.
In the whitepaper, Himes extols the virtue of a CBDC, saying that it would “reside and transact in a network of hardware and software with substantial and novel implications for
transparency, security, and privacy.” However, the ability for the Federal Reserve to monitor and seize digital dollars from those it believes to be misusing them is not exactly an improvement on physical dollars that allow no tracking whatsoever.