# An overview of CBDCs and their potential role in the green economy

## TL;DR

This paper explores how Central Bank Digital Currencies (CBDCs) could support the transition to a green economy by enabling sustainable financial practices and investments.

## Contribution

The paper introduces the potential of CBDCs to facilitate green investments and sustainable energy practices through digital financial tools.

## Key findings

- CBDCs can support green investments and sustainable energy consumption through direct and transparent financial flows.
- The digital euro initiative by the European Central Bank could serve as a model for integrating CBDCs into environmental policy.
- CBDCs may enhance financial inclusion and support sustainability goals by improving access to digital payment systems.

## Abstract

In recent years, there has been an ever-intensifying discussion around the use and establishment of Central Bank Digital Currencies (CBDC) in the global economy. This paper examines the reasons why central banks are aiming to introduce CBDCs into the economy, as well as the ways in which the use of CBDCs could contribute to the transition to the Green Economy, focused mainly around the area of providing financial means and incentives towards green investments, green renovations, and more sustainable energy consumption practices. Aiming to provide an all-around and concise overview of CBDCs, this paper explores their technological background, as well as the areas in which they will mainly contribute, as a means of transaction or value storage. Special mention is also made of the initiatives undertaken by the European Central Bank for the issuance of the digital euro as well as the legal and technological framework within which it could operate, to serve the objectives of the EU. Finally, the potential role of CBDCs in the green economy is examined, and ways in which they could be used as a means of supporting individuals and businesses investing in this direction are presented. This publication is written in the context of the Horizon Europe funded project FORTESIE.

This paper presents an overview of Central Bank Digital Currencies (CBDCs), which are digital versions of national currencies issued and regulated by central banks. Their potential to improve payment systems—by making transactions faster, cheaper, and more secure—has been widely discussed in recent years. In this study, particular attention was given to how CBDCs could contribute to the green economy, which focuses on environmentally friendly investments and practices. The paper examines how such digital currencies could be used to support projects related to energy efficiency, renewable energy, and sustainable business models. Possibilities such as facilitating green investments and offering financial inclusion to individuals without access to traditional banking systems were explored. The technological foundations of CBDCs, including blockchain and smart contracts, were also discussed. In addition, initiatives related to the potential issuance of a digital euro within the European Union were reviewed, along with legal and privacy considerations that would need to be addressed for such systems to function effectively. Although the use of CBDCs in environmental policy remains at an early stage, it was concluded that they hold significant value for enhancing financial systems and supporting sustainability goals. By enabling more direct and transparent financial flows, CBDCs could serve as a valuable tool in the global transition to a greener and more inclusive economy.