America Inches Closer to Creating a Digital Dollar

The Senate Banking Committee held a hearing on a U.S. digital currency, while China is testing its own digital yuan.

July 06, 2020

WASHINGTON—Last month, the U.S. Senate Banking Committee held a hearing about creating a digital dollar, Forbes reports.

The distribution problems in the U.S. with the COVID-19 stimulus checks have created new calls for a digital dollar, along with a better financial distribution method. The Automatic BOOST to Communities Act (ABC Act) recently proposed by Reps. Rashida Tlaib (D-Michigan) and Pramila Jayapal (D-Washington) would give the Federal Reserve permission to launch “FedAccounts” or “Digital Dollar Account Wallets” that would give residents and businesses access to financial services via a phone app, in addition to handing out new stimulus payments.

“The U.S. needs a digital dollar,” said Sen. Tom Cotton (R-Arkansas) during the Senate committee hearing on the Digitization of Money and Payments. “The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”

“In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service,” testified Nakita Cuttino, visiting assistant professor of law at Duke University.

China recently started testing DCEP, a digital yuan, which will be available in the popular WeChat and AliPay apps.