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The public, the private and the secret: Thoughts on privacy in central bank digital currencies

Author

Listed:
  • Ballaschk, David

    (Senior Expert, Deutsche Bundesbank, Germany)

  • Paulick, Jan

    (Principal Expert, Deutsche Bundesbank, Germany)

Abstract

This paper discusses the issues surrounding privacy and anonymity in the context of central bank digital currency (CBDC). Most notably, central banks calibrating the design criteria for CBDC must strike a balance between data protection and the individual’s right to privacy on the one hand, and the prevention of financial crime on the other. In this regard, there are — from a technical and governance point of view — a number of possible solutions. By way of illustration, this paper constructs three exemplary and simplified privacy scenarios. The paper also describes the need for standards to ensure the responsible treatment of data, and clear rules guaranteeing that access is restricted to public authorities fulfilling their mandates. When it comes to protecting user privacy in a CBDC system, this paper argues that independent central banks are ideally positioned to serve as an honest broker. In this respect, gaining the public’s trust and acceptance will be a key challenge for central banks.

Suggested Citation

  • Ballaschk, David & Paulick, Jan, 2021. "The public, the private and the secret: Thoughts on privacy in central bank digital currencies," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 15(3), pages 277-286, September.
    • Handle: RePEc:aza:jpss00:y:2021:v:15:i:3:p:277-286
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    Citations

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    Cited by:

    1. Ozili, Peterson Kitakogelu, 2024. "Central bank digital currency and the monetary policy and financial stability implications," MPRA Paper 120146, University Library of Munich, Germany.
    2. Ozili, Peterson K, 2024. "Artificial intelligence and central bank digital currency," MPRA Paper 121567, University Library of Munich, Germany.

    More about this item

    Keywords

    central bank digital currency (CBDC); privacy; anonymity; retail payments; central banks;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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