Key Takeaways
- Congressional Representatives have introduced a bill that call upon the Treasury to prepare a digital dollar E-Cash.
- E-Cash is meant to preserve privacy and operate without needing access to the Internet.
- The bill is co-sponsored by Democrats, though the legislation appears to address certain concerns of Republican lawmakers.
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Representative Stephen Lynch (D-MA) has introduced the Electronic Currency and Secure Hardware (ECASH) Act. It is a bill that, among other things, directs the Treasury Secretary to make a “retail digital dollar called ‘e-cash.’”
E-Cash Directive
Members of the U.S. House of Representatives are calling upon the Treasury to release a digital dollar, rather than the nation’s central bank.
The ECASH Act, introduced by Rep. Lynch, is co-sponsored by other Democrats in the Committee on Financial Services, including Jesús G. “Chuy” Garcia (D-IL), Rashida Tlaib (D-MI), Ayanna Pressley (D-MA), and Alma Adams (D-NC). The act would mandate that the Secretary of the Treasury, Janet Yellen, prepare a digital dollar for individuals called e-cash.
E-Cash is meant to emulate physical dollars, which can be operated without the Internet and which theoretically preserves privacy, unlike many central bank digital currency proposals. The Treasury would coordinate with the necessary government agencies on the digital dollar, such as the Federal Reserve. This coordination would be conducted via the Digital Dollar Council, which the Treasury Secretary would head.
The bill’s passage would also create an Electronic Currency Innovation Program as part of the Treasury. This program would research and create various forms of the necessary infrastructure for the digital dollar, like hardware wallets that would hold e-cash.
A Monetary Privacy Board would also be instituted by the Act. This would be an independent group tasked with ensuring the government’s due diligence with respect to privacy preservation and civil liberties protection. For example, open-source software and hardware should be prioritized when possible, the bill writes.
Finally, the bill would establish an account at the Federal Reserve Bank of New York to fund the e-cash program, and it calls upon the Fed’s Board of Governors to manage the liquidity of the overall monetary system so that banks and other existing financial institutions face minimal disruption.
The bill emphasizes the importance of extending financial inclusion (e.g. citing the Community Reinvestment Act of 1977), as well as to promote the general innovation possible from digital assets.
E-cash’s creation and issuance would not preclude the possibility for a CBDC to be made in parallel, something the Federal Reserve has been researching. Many other nations such as Mexico, England, Canada, Ukraine, Malaysia, Brazil, Ghana, and others have conducted similar research as well.
Across the aisle, the Republican representative Tom Emmer introduced a bill last January that would check the Fed’s powers in regard to a central bank digital currency. One of Emmer’s concerns pertained to privacy, and so perhaps there is room for bipartisan support of the ECASH Act introduced today.
The current Treasury Secretary, Janet Yellen, has uttered harsh remarks on crypto before, though last week she seemed to soften her stance.
President Biden signed an Executive Order earlier this month that included mandates on CBDCs.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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