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These Fed “digital dollar” accounts would be set up as a way to speed payments to households that need support. As things now stand, the U.S. government lacks the infrastructure to disperse payments widely, and given the nature of the current crisis, speedy action is critical.
Julia Coronado, of MacroPolicy Perspectives LLC, along with Simon Potter, the former manager of the New York Fed’s markets desk, wrote in a forthcoming paper about the benefits of the central bank having digital accounts available to everyday people. “Boosting consumer demand directly is likely to be more effective and have better distributional implications than the current approach of boosting asset prices” through asset buying, and “it can be implemented faster than discretionary fiscal stimulus,” they wrote.
