A potential game changer for government-sponsored digital currencies. The ECASH Act, which proposes a digital currency without central bank backing, is introduced in the U.S. House of Representatives.
The Electronic Currency and Secure Hardware Act , introduced today in the United States House of Representatives, could herald a new direction in government-sponsored digital currencies.
The initiative isn’t meant to necessarily preclude a Fed-issued CBDC, however. The pilot program launched by the ECASH Act 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,” said Lynch, a democratic representative from Massachusetts, in a statement. Representatives Chuy Garcia, Ayanna Pressley and Rashida Tlaib are co-sponsors of the bill.
What is striking is that the proposal doesn’t involve a central bank or digital ledger technology , which could presage a new path in state-sponsored digital money development. It arguably offers more privacy and anonymity than any other government-sponsored digital currency project to date, calling for an “electronic dollar” to be used by the general public that is capable of:
The current CBDC debate on digital money often pits currencies with a centralized digital ledger, like China’s digital yuan, against digital currency issued on a distributed ledger, or blockchain. What is proposed in nearly all instances, however, is the use of a ledger. That is, “transactions get recorded on a common balance sheet somewhere,” said Grey, adding:But, with e-cash, there would be no ledger, just as no ledger is used for physical cash transactions.
In recent years, the U.S. has been under some growing pressure to develop a central bank digital currency, particularly as China moves closer to a full roll-out of its digital yuan. Lynchthe challenges in today’s statement: “As digital payment and currency technologies continue to rapidly expand and with Russia, China, and over 90 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the U.S.
Still, why would e-cash be issued through the Treasury Department and not the Federal Reserve? “If you were to say you wanted to create something digital that works like physical currency: It’s a token, it’s a bearer instrument, there are no accounts, no intermediaries or it’s going to be retail focused, who should issue that?” asked Grey. Treasury is the obvious candidate in his view.
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