A new bill would launch a large-scale test of digital dollars

Graphics by Michele Doying / The Verge

A US lawmaker has proposed a large-scale trial of government-backed digital cash. The Secretary of the Treasury would be directed to publicly test the electronic version of the US dollar under the Electronic Currency and Secure Hardware (ECASH) Act. The bill's odds of passing are low, but it shows governments are interested in launching alternatives.

The Secretary of the Treasury would be required to establish a program called the Electronic Currency Innovation Program. The Treasury Department-issued legal tender that can be used without banks or credit card companies would be overseen by the ECIP. Within 90 days of the bill's passage, the Treasury would initiate the pilot and deploy e-cash to the public.

The ECASH Act seems to discourage the use of digital dollars. It's a tall order for a system that publicly logs transactions to allow peer-to- peer transactions. The idea is to mimic cash's high level of privacy, its ease of use, and its lack of fees or processing hurdles, but subtract the physical bills.

Lynch's bill is co-sponsored by a number of people. They would be conducted in partnership with universities or existing financial institutions, and they would be designed to experiment with different technologies. One test would need to involve a physical card that can hold cash, while another would need to use a cellphone or sim card to hold funds. Within 48 months, there would be a limited public trial and general deployment.

The Federal Reserve released a preliminary report on digital currency earlier this year, suggesting it could benefit Americans who aren't served by the current. The Biden administration included a central bank digital currency as an action item in its executive order. Many governments outside of the US are looking at digital currencies. The European Commission plans to propose a digital euro in 2023, and China launched a pilot program in January.

The bill states that e-cash is distinct from the Federal Reserve program. There is no central or distributed ledger that keeps track of transactions. Digital cash would be lost if the device or card holding it goes missing. EagleCash is a digital money storage card for members of the military.

The goal is to get a simple digital currency system in Americans and to promote financial inclusion.