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Why would anyone use a digital dollar over USDC when one is frictionless and works as long as the recipient isn't OFAC material and the other one is going to have requirements up the ass? Banks are probably being going to be intermediaries to distribute digital dollars anyways so I don't really see the benefit.

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Simple: USDC is not backed by the state.

USDC almost lost a good chunk of its reserve backing when SVB went bust. It was only the bailout that saved it. They had $3 billion of their reserves there.

When you use regular Eurodollars you only need to trust your bank and you may have deposit insurance. With USDC you need to trust:

* Circle

* Your exchange

* Your own security

The latter generally isn't a factor with fiat, as transactions are reversible

Yes, there are risks when using USDC that are not present when using the traditional banking system. My point is that the proposed digital dollar would not offer any benefits over the regular banking system to its users (except saving wire transfer fees maybe?), and to me appears like it would not even handle the edge case of servicing the "unbanked" any better than banks already do.

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