DeSantis has proposed a bill that would ban the use of digital currencies issued by the Fed or any foreign central bank, at a time when the Federal Reserve is exploring the idea of creating a CBDC (Central Bank Digital Currency).
A CBDC is a digital version of an existing currency that is fully backed by the government’s trust and credit.
Talks about CBDCs have increased during the cryptocurrency frenzy in 2020 and 2021, pushing governments to explore the potential of issuing their own digital currencies. CBDC advocates also claim that a digital dollar would provide benefits such as faster transactions, lower fees, improved efficiency in cross-border transactions, and better access to banking services for populations that lack such access.
There is currently no official timeline for the launch of a digital dollar issued by the Fed, and there is no confirmation that the Fed will proceed with it, but the FedNow Service is expected to launch in July.
The FedNow Service is a real-time payment system aimed at eliminating existing delays in the clearing of financial transactions between different institutions. The launch of the FedNow Service is seen as a potential precursor to the launch of a CBDC.