Digital Bearer cash

White at Alt-M:

From the user's point of view, the Digital Dollar Project's "champion model" is akin to a well-backed dollar stablecoin, that is, a transferable digital token pegged to $1.00 per unit by its issuing entity. (Tether is by far the leading US-dollar-linked stablecoin with more than $9 billion currently in circulation. Here is a list of the many other available stablecoins.) But there are some differences between the Project's model and the typical stablecoin: the model's coin issuer is not a private entity, the fix to the dollar is free of default risk, and the exchange-rate variation around the $1.00 peg is zero. The issuer is to be the same US government agency currently responsible for supplying fiat US dollars in paper and ledger-entry form: the Federal Reserve System.
Rather than buy FedCoins on an exchange, a user would get them from banks the way she gets fresh Federal Reserve Notes, redeeming her deposit dollars for them. She would hold FedCoin balances in a digital wallet, perhaps an app on her cell phone, and spend them online or in person, or transfer them to her friend, using the phone app.
The Fed would stand ready to interchange FedCoins (which the report calls "Digital Dollars," but FedCoins is less ambiguous) 1:1 with existing types of base money, Federal Reserve Notes (which are not to be abolished), and commercial banks' reserve balances on the books of the Fed. In this way FedCoins are to be a form of fiat money, part of the US dollar monetary base. They are to have "the same legal status as physical bank notes," which I interpret to mean that they are to be legal tender like Federal Reserve Notes. That is, they cannot be refused in the discharge of any dollar-denominated debts. Commercial banks will be as happy to accept them on deposit, and to pay them back out, as they are to accept and pay out Federal Reserve Notes.
Because Federal Reserve Notes are not to be abolished, the Digital Dollar Project proposal does not eliminate the "zero lower bound" on the Fed's nominal interest rate target posed by the storage of zero-yielding currency, and thus does not enable negative interest rate policy. The Report describes its champion model as "monetary policy neutral." I consider that a welcome feature and not a bug in the proposal, but NIRP enthusiasts who want to abolish cash will consider it a shortcoming. Whether FedCoins are to bear interest is left an open question.
The Report is generally fuzzy or flexible on technical details. FedCoin payments are to be "recorded on new transactional infrastructure, potentially informed by distributed ledger technology." What, pray tell, is this "new transactional infrastructure"? How is it "informed" by distributed ledger technology?

The bold face is mine.

The question is how are bearer digital coins tracked. Either an anonymous, automated ledger, or the user has a counterfeit proof cash device in hand.  We can do a hybrid, no problem.

If you have the smart card then you can spend from the ledger to a regulated smart card, by ID. That puts your digital cash off line, but it is still good card to card.