Digital Euro Association Blog

Privacy & Anonymity Considerations of a Retail CBDC

Extensive research in the field of Central Bank Digital Currencies (CBDC) is underway. However, one of the most crucial concepts remains under-researched i.e., privacy and anonymity considerations of a retail CBDC. More specifically, there is a need to analyze the current technical and regulatory landscape of CBDC and evaluate the extent of privacy/anonymity which can be guaranteed to the citizens. In his thesis entitled "Analysis of Privacy and Anonymity Considerations of Retail CBDC", author Jaskaran Singh delves deeper into the topic of privacy and explores if anonymous transactions in realms of CBDC are possible (and desirable) from a technical and regulatory perspective.

The results of his research indicate that the privacy of financial transactions is highly valued by the citizens. Moreover, it is possible to implement cash-like anonymity in a CBDC structure from a technical perspective. However, given the trade-off between privacy and regulatory compliance, the extent of privacy that can be enabled is limited. Results further indicate that CBDC needs to differentiate itself from incumbents to get successfully adopted by the public. Mixed results were reported in the case of anonymity being a unique feature of CBDC and hence driving user adoption.

Awards & Accomplishments
This research has been awarded the 'Best Thesis Award' by the Stiftung Finanzbildung gemeinnützige UG (Foundation for Financial Education, Germany).

A link to the research paper overview may be found here.

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