- J Markezic and M Bacina
Cashing in on the 'ECASH' bill: US Bill signals move to digital dollar
Lawmakers in US Congress have tabled a new Bill - the Electronic Currency and Secure Hardware Act (ECASH) - that if passed, would direct the US Treasury to develop and issue an electronic version of the US Dollar.
Under the Bill, the electronic dollar would be a bearer instrument that consumers could hold on their phone or bank card. Importantly, the electronic dollar would be token-based as opposed to account-based. In other words, if a consumer were to lose their phone or bank card, they would be losing their funds.
Under the proposed regime, the electronic dollar would be classified as legal tender and functionally identical to the traditional US Dollar. In effect, the electronic dollar would support anonymous, peer-to-peer transactions. The new electronic dollar proposed under ECASH differs from other digital dollars that have been previously proposed which have traditionally relied upon stablecoin or other decentralised ledger technology.
It's important to note that this new electronic dollar won't be issued by the Federal Reserve Board (Fed), rather the actual US Treasury Department itself. This means that the electronic dollar would not technically be classified as a central bank digital currency (CBDC), and nor would it be built on a blockchain - or even need the internet to function.
The Bill does not necessarily rule out a Fed-issued CBDC in the future. In fact, the US Representative who proposed the Bill - Stephen Lynch (D-Mass) - has said that the ECASH will:
...complement, and advance ongoing efforts undertaken by the Federal Reserve and President Biden to examine potential design and deployment options for a digital dollar...
Whether the Bill will pass, and whether this sets the wheels in motion for a Fed-issued CBDC, remains to be seen.