- Senate strikes deal on major 2 trillion fiscal stimulus package to rescue the economy.
- Asian and European stocks rise on the news.
- A proposal for a digital dollar was removed from the package.
The US has finally agreed on a stimulus package. It will inject the economy with $2 trillion in an effort to curb the coronavirus fallout. The traditional stock indices in Asia and Europe, as well as cryptocurrency markets, are rallying on the news.
The groundbreaking deal was struck between opposing members of US government early Wednesday morning, reports Bloomberg.
"At last we have a deal," Senate Majority Leader Mitch McConnell remarked on the Senate floor. "I'm thrilled that we're finally going to deliver to the country."
Senate Majority Leader Mitch McConnell announed the deal earlier today. Image: Shutterstock.
The abundant package encompasses $500 billion to bail out companies and back loans. A further $350 billion is set aside to aid small businesses. And $150 billion for hospitals, and health care provisions, such as supplies and equipment. In terms of direct payments, the package sets out $1,200 for each lower/middle-income American adult with an extra $500 per child.
Asian markets responded positively to the news, with Tokyo's Topix index rising 6.9%.
Over in Europe, the Stoxx 600 was up 4.4% and the UK's FTSE 100 up 4.5%.
The price of Bitcoin added 5% in the time since the news broke this morning. This has increased its recovery from recent lows of $4,500. While it appears to generally be uncorrelated with traditional markets, it has shown more overlap in recent weeks.
The US markets rose yesterday ahead of the deal, with markets sensing it was nearly finalised. The Dow added 11%—taming its recent bearish trend—yesterday. Similarly, the S&P 500 cited the most significant single-day gain in 12 years. The US markets are yet to open today.
However, those in the Bitcoin world wonder whether the sudden influx of new dollars will devalue the dollar. "In a sea of ever inflating fiat currencies and 2 trillion dollar platinum coins, what are you actually earning every month?" Blockstream CSO asked, on Twitter, referring to a proposal to create two trillion-dollar coins.
A digital dollar put on the back burner
As reported by Decrypt, the proposal for a digital dollar dropped was dropped from the coronavirus economic stimulus bill yesterday. The provision would have witnessed the production of a digital fiat currency to hasten emergency funds onto businesses and individuals.
While it may have boosted the awareness of digital currencies, some said the notion of embarking upon such an undertaking amid a pandemic was beyond comprehension.
"Using a health crisis to sneak in a payments system. By the time they've built this platform (it could take years) the virus will have already passed," said monetary economics and Bitcoin analyst, John Koning.
Nevertheless, a new draft bill posted yesterday by the US Senate Committee on Banking, Housing, and Urban Affairs indicates that this isn't the last we'll see of a digital dollar.