In addition to environmentally friendly features, the International Monetary Fund (IMF) advised central banks to include compliance, better resilience, and offline features in CBDCs.
The relevance of concepts within the crypto ecosystem to construct an ecologically friendly widespread payment system was shown in an IMF study on energy use.
The IMF studied the energy consumption of crypto assets based on their various design components in a study titled “Digital Currencies and Energy Consumption,” in order to determine the best method for creating CBDCs.
The IMF advised shifting away from proof-of-work (PoW)-based distributed ledger (DLT) applications as a starting point for policy debates on the environmental consequences of digital currency.
Also read, 10 Eco-Friendly Cryptocurrencies You Should Know
Furthermore, Bitcoin (BTC), the most well-known use of this type, is predicted to consume a significant amount of energy (about 144 terawatt-hours (TWh)) every year. Although scaling solutions lower transactional energy costs, they do not lower total energy use.
Nevertheless, when compared to the existing banking system, the international organization recognized the excellent energy effectiveness brought about by non-PoW, permissioned crypto assets.
Non-PoW permissioned crypto-assets have the opportunity to decrease energy consumption in comparison to current payment systems due to energy savings on both main processing architectures and user payment methods.
The IMF’s proposal to central banks, based on the study’s findings, is to create CBDCs with the explicit purpose of being ecologically benign.
Also read, Energy Efficiency and Eco-friendly Crypto Mining
This entails beginning the testing phase with platforms, technology, and design options that have lower emissions than the central banks’ legacy systems.
Central banks were advised to integrate other characteristics in CBDCs, including compliance, better resilience, and offline capabilities, in addition to eco-friendly components.
The idea will enable BioE’s sustainable energy and composting facilities to track carbon emissions in near-real-time.
The Iota Foundation’s head of sustainability, Mathew Yarger, noted that they can now monitor and verify data on climate change and how they are actively working to address it like never before.
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