Environmental Implications of a Central Bank Digital Currency (CBDC)

Publication:
Environmental Implications of a Central Bank Digital Currency (CBDC)

dc.contributor.author	Lee, Soohyang
dc.contributor.author	Park, Jinhee
dc.date.accessioned	2022-07-13T21:01:24Z
dc.date.available	2022-07-13T21:01:24Z
dc.date.issued	2022-07
dc.description.abstract	Two-thirds of central banks in the East Asia and Pacific (EAP) region have started researching or testing the implementation of a Central Bank Digital Currency (CBDC). At the same time, the region accounts for one-third of world CO2 emissions and is vulnerable to climate risks. As the Group of 7 (G7), European Central Bank (ECB), and Bank of England (BoE) have stated in their public statements, it is increasingly important to consider environmental impact when designing CBDC. However, only a few brief studies have been done on this subject, which will be crucial for the region. This Note explores the environmental implications of CBDC by comparing technical mechanisms and energy consumption within its distributed structure. It also illustrates differences in ecological footprint between CBDC and other payment methods (cryptocurrency, cash, and card networks). As the legitimacy of CBDC is backed by the trust of central banks, CBDC does not need to prove its legitimacy through its technological structure. Therefore, CBDC does not require the energy-intensive consensus or mining mechanisms used by a cryptocurrency, so its energy consumption is lower (comparable to that of a credit card system). CBDC can be designed to use various systems, such as Real Time Gross Settlement (RTGS), Distributed Ledger Technology (DLT), or a mixture of both. Careful deliberation to meet the objectives and implications will be important as CBDC can be a catalyst for financial innovation.	en
dc.identifier	http://documents.worldbank.org/curated/en/099400407132237243/IDU0a124ade308b10049bc0b76606ab6c8403920
dc.identifier.doi	10.1596/37702
dc.identifier.uri	https://hdl.handle.net/10986/37702
dc.language	English
dc.language.iso	en_US
dc.publisher	Washington, DC : World Bank
dc.relation.ispartofseries	World Bank Group Korea Office Innovation and Technology Note Series;No.8
dc.rights	CC BY 3.0 IGO
dc.rights.holder	World Bank
dc.rights.uri	http://creativecommons.org/licenses/by/3.0/igo
dc.subject	CENTRAL BANK DIGITAL CURRENCY
dc.subject	ENVIRONMENTAL IMPLICATIONS
dc.subject	FINANCIAL STABILITY
dc.subject	PAYMENT SYSTEMS
dc.subject	LONG-TERM SUSTAINABILITY
dc.title	Environmental Implications of a Central Bank Digital Currency (CBDC)	en
dc.type	Working Paper	en
dc.type	Document de travail	fr
dc.type	Documento de trabajo	es
dspace.entity.type	Publication
okr.date.disclosure	2022-07-13
okr.date.doiregistration	2025-05-05T11:49:55.073454Z
okr.date.lastmodified	2022-07-13T00:00:00Z	en
okr.doctype	Publications & Research::Working Paper
okr.doctype	Publications & Research
okr.docurl	http://documents.worldbank.org/curated/en/099400407132237243/IDU0a124ade308b10049bc0b76606ab6c8403920
okr.guid	099400407132237243
okr.identifier.externaldocumentum	33867831
okr.identifier.internaldocumentum	33867831
okr.identifier.report	173817
okr.imported	true	en
okr.language.supported	en
okr.pdfurl	http://documents.worldbank.org/curated/en/099400407132237243/pdf/IDU0a124ade308b10049bc0b76606ab6c8403920.pdf	en
okr.region.geographical	East Asia and Pacific
okr.topic	Finance and Financial Sector Development::E-Finance and E-Security
okr.topic	Macroeconomics and Economic Growth::Climate Change Economics
okr.unit	Korea World Bank Group Office (EAPKR)
relation.isSeriesOfPublication	3e126efc-de2f-4a95-be5b-bd2e430a4843
relation.isSeriesOfPublication.latestForDiscovery	3e126efc-de2f-4a95-be5b-bd2e430a4843