COVID-19 Economic Stimulus: Get Money To People Faster With Digital Dollars

It was another unprecedented week in an unprecedented time as COVID-19 and the coronavirus shuts down much of the world. Europe is the center of the fatalities as the pandemic overtaking China shifts West to the U.S. with New York reporting its highest single day fatalities. 

We spare our thoughts for those who have fallen and pay our respect to front-line health workers fighting this global pandemic with coordinated daily rounds of open applause from doors, windows and balconies in town and cities across the world.

In the U.K., Prince Charles, Prime Minister Boris Johnson, Health Minister Matt Hancock and Chief Medical Officer Chris Whitty have all tested positive for the coronavirus. The UK has had over 700,000 people volunteer to help with the health system and community support to fight the coronavirus.

A front-line account from Dr. Kerry Kennedy Meltzer working in a New York hospital emergency department reports a 12-hour shift at the hospital treating young patients in their 20s and 30s.

As most countries scramble to buy enough medical supplies such as Personal Protective Equipment (PPE) for front-line health workers, oxygen machines and Intensive Care Unit (ICU) beds and bed capacity, the most prevalent tool in the fight against the virus is the lockdown – Stay at home – Social Distancing.

It is not a global financial crisis. It is a global health crisis creating a global financial crisis, and a social crisis of unfathomable comprehension.

The impact to the economy created by the millions of people staying at home has hit many business sectors from airlines to restaurants hard. Over three million Americans lost their jobs last week and applied for unemployment insurance, the largest number in history.

Tracey Alloway of CNBC described it best, “The financial system is just not set up for a temporary forbearance on payments. If someone doesn't pay for something, then someone else is owed something. (Buyers of credit protection *will* ask for money due)."

The U.S. President Donald Trump signed the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act on Friday the 27th of March to bolster the country’s health system and the fight against the coronavirus. As importantly, the act offers economic relief, not just for big business, but critically to individuals and families and small businesses.  

What is not clear is how quickly this money is going to people and businesses.

An earlier draft of the act considered a digital dollar as a means of getting money to people faster. This would see a U.S. dollar central bank digital currency (CBDC). Experts believe it is a bit too early for a U.S. CBDC as the technology is not in place today and should not be rushed.

Former CFTC Chairman Giancarlo and Daniel Gorfine the former chief innovation officer at the CFTC proposed a “digital dollar” earlier this year. ConsenSys delivered a white paper on CBDCs at Davos in January as did the World Economic Forum and there are number of projects in train.

R3 is currently working with a number of central banks on CBDC projects, most notably the Swedish Central Bank which has begun testing. Libra would make a strong candidate for the distribution of funds, were it up and running.

U.S. dollar stablecoins are also proving popular in this time of economic volatility. Stablecoins are blockchain based crypto currencies that are backed by assets like U.S. dollars, typically pegged one coin to one dollar. These coins offer an excellent vehicle for moving money quickly removing the risk of volatility of other crypto assets.

Bitcoin is proving to be a popular route to get money to people who need it. In my global professional community, there are a number of anecdotal cases of intermediaries working with charities to help them process bitcoin transactions to get money to the front line fight of the coronavirus.

Given the size an complexity of many government funding programs, it is not clear who or as importantly how quickly businesses and citizens are going to receive desperately needed money to sustain themselves.

Governments around the world would be advised to consider mobilizing the global crypto and digital assets sector now to deliver solutions to get money to people faster during this on-going crisis.