Trillion-dollar stimulus jumpstarts bank project

Digital dollars exploded into mainstream headlines earlier this week.

As the US House of Representatives scrambled to craft a draft bill that would authorize trillions of dollars in payments to "consumers, states, businesses, and vulnerable populations during the COVID-19 emergency" it introduced the digital dollar concept that could potentially let the Federal Reserve, responsible for printing US dollars, send stimulus money directly to individuals.

Inspired by bitcoin and its underlying blockchain technology that lets individuals send value to each other without any middlemen, the concept had been percolating behind the scenes in blockchain skunk works for months when millions of people around the world saw first hand evidence of how the technology could impact them personally. Why give the money to banks and hope it trickles down, if the intended recipients are actual citizens?

A previously scheduled meeting at blockchain consortium Hyperledger, about a new project called eThaler using the ethereum blockchain to create a central bank digital currency, took on new meaning, and urgency. Until the bill, sponsored by California Congresswoman and chair of the House Financial Services Committee, Maxine Waters, mentioned the use of digital dollars, their benefits were largely theoretical. Now, all of a sudden, there was a very clear use.

Such a prominent mention of digital dollars in a House bill, in relation to the Federal Reserve, means that the largest economy in the world has officially entered what is an increasingly heated race between a number of advanced projects at central banks around the world to be the first to issue this new kind of currency. "The concept of the CBDC seems to have gotten an imprimatur from the house finance committee," said Vipin Bharathan, 59, chair of the Hyperledger identity working group.