If there was one piece of evidence to suggest that the Covid-19 outbreak may change the way that the world works, and how the economy runs, in the long run, it may well be the idea of the Digital Dollar.
A draft of the legislation circulating from the Democrats in the United States House of Representatives suggests the creation of digital wallets for US citizens to be maintained by the Federal Reserve. This is in line with the idea of the Fed providing cash stimulus to families of $2,000 to every adult earning less than $75,000 a year.
Is proposing a rather contentious stimulus package, and has suggested printing almost unlimited money. The enacting of a digital dollar will make this even easier, and more effective, in terms of the distribution of the cash. In the long run, this could also help the US and its regulators to understand the potential of Bitcoin, or a Central Bank Digital Currency.
Stimulus in a time of crisis
The Covid-19 outbreak has certainly begun impacting the world, and the global economy. It has forced governments to bring forward stimulus packages to try and help people who are housebound and who have left jobs standing empty, weakening the economy.
The stimulus package is looking to distribute as much as $1.8 trillion around the US, but the first draft put forward by the Republicans was blocked in the Senate as it focused heavily on big business bailout, and did not have any mention of a digital dollar.
The latest draft seems to be more people-oriented and that is also in line with Bitcoin being a tool for the people to fund themselves and manage their own money.
However, it is the delivery of these packages that is really interesting to note and could have a long term impact on the way in which money and finance are dealt with in the years to come.
Digital Dollar to Bitcoin?
Should the notion of a digital dollar be implemented, it will, of course, be highly centralized and not have many bearings to Bitcoin as a decentralized blockchain-based asset, but it could open the eyes of the US regulators.
Thus far the US has been very sceptical of any digital financial products — looking to disrupt the launch of Libra before it even took off. But, by being forced to implement their own digital creation, the rules on Bitcoin may well become a little more relaxed and measured.