The U.S. Senate Committee on Banking, Housing and Urban Affairs introduced legislation Tuesday requiring banks to maintain “digital dollar wallets” to help facilitate coronavirus stimulus payments to consumers.
The idea was first introduced in a pair of draft bills by House Democrats Monday, though the language about digital dollars and wallets was ultimately removed.
Since much of the U.S. payments system is largely digital already, the concept is more about giving consumers direct access to a bank account with the Federal Reserve, rather than digitizing the dollar.
The Senate bill, introduced by Sen. Sherrod Brown (D-OH) as the Banking For All Act, would allow people to set up “FedAccounts” where they could receive COVID-19-related relief payments quickly and efficiently in a time of crisis rather than having to rely on shadow banking services.
“My legislation would allow every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money,” Brown said in a statement Tuesday. “I look forward to continuing to negotiate with my colleagues, and urge them to prioritize people over big banks and corporations.”
FedAccounts would be available at local banks and Post Offices. Beyond receiving immediate stimulus payments, they would also allow people to make payments and take out cash. The accounts would come with debit cards, online account access, automatic bill-pay, mobile banking, and ATM access at Post Offices.
The system would essentially bypass the role of commercial banks, which act as dispensaries for dollars, by giving the Fed direct access to consumers and vice versa.
As of 2017, 8.4 million U.S. households were unbanked, which includes 14.1 million adults, according to the Federal Deposit Insurance Corporation. Another 18.7 percent of households were underbanked, meaning they have an account at an FDIC-insured institution but have also sought financial products or services from the shadow banking industry.
Details on how the creation and use of these FedAccounts would be executed, however, are still unknown.
