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Digital Dollar Bill Resurfaces in Congress

Digital Transactions

In March 2022, Lynch (D-MA) proposed similar legislation in the prior Congress, but it failed to gain traction in the Republican-controlled chamber and didn’t pass the House. To some degree, the legislation is an attempt to find an alternative to the physical dollar, which has declined in use as electronic payment options have increased. 

This year’s legislation, once again referred to as the ECASH Act bill, is cosponsored by some of the same Democrats as was the case previously, including Reps. Jesús G. “Chuy” García (D-IL), Rashida Tlaib (D-MI) and Ayanna Pressley (D-MA). It was referred to the House Financial Services committee for review.

The bill was one of several pieces of legislation that came up at a Sept. 14 hearing of the committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion regarding digital currencies. That subcommittee hearing, titled “Digital Dollar Dilemma: The Implications of a Central Bank Digital Currency and Private Sector Alternatives,” drew testimony from representatives of the Bank Policy Institute, the Cato Institute and Columbia Law School, among others. 

The digital dollar proposed by Lynch’s legislation would not be the same as a central bank digital currency, or CBDC, which has been considered by the Federal Reserve. The digital collar could, however, “complement” a CBDC, according to a spokesperson for Lynch’s office.

The digital dollar would not operate on a distributed ledger or blockchain technology, which is the technology that underpins other CBDCs that have been created in some countries.

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