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ECO-FRIENDLY FEATURE RECOMMENDATION BY IMF FOR CBDCs

ECO-FRIENDLY FEATURE RECOMMENDATION BY IMF FOR CBDCs

A study by the International Monetary Fund (IMF) on energy use has highlighted the importance of design options within the crypto ecosystem to create a standard payment system that is environmentally friendly.


In a study entitled "Digital Funds and Energy Consumption," the IMF examined the use of crypto assets based on a variety of design elements to evaluate the best way to improve digital banking (CBDCs).


Sharing the basis of policy discussions on the environmental impacts of digital finance, the IMF recommended that you withdraw from Proof of Work (PoW) -based distributed ledger (DLT) applications, adding:


In particular, Bitcoin (BTC), a well-known system of this type, is estimated to use a lot of energy (approximately 144 terawatts (TWh)) per year. Although measurement solutions reduce the cost of energy for each product, they do not reduce the total energy consumption. ”

However, the international organization has acknowledged the efficient use of non-PoW, the crypto assets allowed compared to the traditional financial system:


"The strength of non-PoW crypto assets with a license to reduce power consumption compared to the existing payment system stems from energy savings in both basic processing structures and user payment methods."

Reaching the conclusion of the study, the IMF's recommendation to major banks "is to design CBDCs with a clear goal of environmental protection." This means selecting platforms, computer systems and design options “with lower carbon footprint than mid-sized banking systems” from the testing phase.


In addition to the environmentally friendly components, major banks are recommended to incorporate other features into CBDCs, such as compliance, high durability and offline capability.


The IMF has also indicated that policy makers will consider the focus of crypto or CBDCs by measuring the natural impact of the basic technology design. In a study, the IMF estimated that annual power consumption through the global payment system stands at 47.3 TWh - about the same as the annual consumption of economies like Portugal and Bangladesh.



Joining cause of climate change mitigation, Iota Foundation, a non-profit DLT ecosystem provider, has partnered with Dell Technologies to develop a real-time carbon footprint tracking system.



This program will provide a real-time tracking of carbon emissions from a sustainable BioE energy and composting facility. Matthew Yarger, head of sustainability at the Iota Foundation, said:


"We are now able to track and verify data on climate change and how we are trying to tackle it at an unprecedented rate."

Source: cointelegraphy




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