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Mr. Itai Agur, Jose Deodoro, Xavier Lavayssière, Soledad Martinez Peria, Mr. Damiano Sandri, Hervé Tourpe, and Mr. German Villegas Bauer

acknowledging that this is only one of many relevant considerations to evaluate the desirability of issuing a CBDC. Moreover, this discussion centers on retail CBDCs, which are the closest comparator to the payment methods analyzed in the previous sections. A retail CBDC is a novel payment instrument that is intended for use by consumers and firms and that, depending on its design, can blend various features currently attributed to cash and bank deposits ( Agur, Ari, and Dell’Ariccia 2022 ). 24 Current CBDC projects are based on non-PoW permissioned DLT or on modernized

Mr. Itai Agur, Jose Deodoro, Xavier Lavayssière, Soledad Martinez Peria, Mr. Damiano Sandri, Hervé Tourpe, and Mr. German Villegas Bauer
Whether in crypto assets or in CBDCs, design choices can make an important difference to the energy consumption of digital currencies. This paper establishes the main components and technological options that determine the energy profile of digital currencies. It draws on academic and industry estimates to compare digital currencies to each other and to existing payment systems and derives implications for the design of environmentally friendly CBDCs. For distributed ledger technologies, the key factors affecting energy consumption are the ability to control participation and the consensus algorithm. While crypto assets like Bitcoin are wasteful in terms of resources, other designs could be more energy efficient than existing payment systems.