Digital Dollar is the term given to the potential digital currency that the US central bank (CBDC) would issue. Just as the name suggests, the digital dollar is going to represent the electronic form of US dollars that would be deposited in digital form only.
The Digital Dollar Project was announced back in May 2021. The idea is to promote the US dollar as a cryptocurrency throughout the world. This, in turn, would make international transfers more affordable. With a faster payment process, Digital Dollar can mitigate the delay with tax refunds and other government payments.
The value of the digital dollar would be $1, backed by the US central banks. So, the digital dollar would pit against stablecoins such as USDT and USDC which are pegged to the US dollar for stable value.