Federal Reserve Board (FRB) Chair Jerome H. Powell announced on Thursday May 20, 2021, the Federal Reserve plans to publish a discussion paper this summer that will explore the possibility of issuing a U.S. central bank digital currency (CBDC).

According to Powell in a video message, the Federal Reserve has been carefully monitoring recent technological advances that are driving rapid changes regarding payment methods, and has been exploring ways to refine the FRB’s role as a core payment services provider and as the issuing authority for U.S. currency.

In particular, the Federal Reserve is exploring the development and issuance of central bank digital currencies, or CBDCs. The term “central bank digital currency” is not well-defined, and various implementations have been proposed, but in essence, a CBDC is a type of central bank liability issued in digital form. Based on its implementation, a CBDC could be designed for use by the general public as a digital representation of fiat currency.