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<p>Privacy/anonymity of digital transactions is an issue that potentially may affect demand for central bank digital currency. Does discussions about privacy paradox related to CBDC? In this paper, basing on the respondent’s survey, we construct indexes of privacy preferences (in general, in digital and financial environment) to identify relations between stated preferences in different contexts and between choice toward anonymity vs functionality of CBDC, trust to central bank as CBDC issuer and its independence as a precondition to guaranty anonymity of transactions. We find that generally respondents demonstrate consequence of preferences in terms of, what we call, general privacy, privacy in digital and financial environment. Distribution of obtained 3 indexes demonstrates some differences. Probit model also demonstrates that relation between choice toward anonymity over functionality of CBDC and level of 3 indexes is modest. Where is no correspondence between choice toward anonymity over functionality and trust in central bank and its independence. However, respondents demonstrate high level of trust in central bank ability to guaranty anonymity of transactions and view independence as supporting it even opting functionality over anonymity. We reach a conclusion that some weak form of privacy paradox is exist, central banks, promoting CBDC, should stress on functionality of it. However, privacy should not be ignored. It is better to have it as “nice bonus” to functionality of CBDC.</p>
</abstract>

Privacy/anonymity of digital transactions is an issue that potentially may affect demand for central bank digital currency. Does discussions about privacy paradox related to CBDC? In this paper, basing on the respondent’s survey, we construct indexes of privacy preferences (in general, in digital and financial environment) to identify relations between stated preferences in different contexts and between choice toward anonymity vs functionality of CBDC, trust to central bank as CBDC issuer and its independence as a precondition to guaranty anonymity of transactions. We find that generally respondents demonstrate consequence of preferences in terms of, what we call, general privacy, privacy in digital and financial environment. Distribution of obtained 3 indexes demonstrates some differences. Probit model also demonstrates that relation between choice toward anonymity over functionality of CBDC and level of 3 indexes is modest. Where is no correspondence between choice toward anonymity over functionality and trust in central bank and its independence. However, respondents demonstrate high level of trust in central bank ability to guaranty anonymity of transactions and view independence as supporting it even opting functionality over anonymity. We reach a conclusion that some weak form of privacy paradox is exist, central banks, promoting CBDC, should stress on functionality of it. However, privacy should not be ignored. It is better to have it as “nice bonus” to functionality of CBDC.

CBDC, Trust in the Central Bank and the Privacy Paradox

ECONOMICS

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"CBDC, Trust in the Central Bank and the Privacy Paradox"}

Privacy/anonymity of digital transactions is an issue that potentially may affect demand for central bank digital currency. Does discussions about privacy...

CBDC, Trust in the Central Bank and the Privacy Paradox

Published Online: Jun 24, 2024

Page range: -

Received: Feb 10, 2024

Accepted: Jun 30, 2024

DOI: https://doi.org/10.2478/eoik-2024-0025

Keywords
central bank digital currency, digital money, anonymity of transactions, CBDC design, privacy paradox

© 2024 Viktor Koziuk et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

CBDC, Trust in the Central Bank and the Privacy Paradox

Published Online: Jun 24, 2024

Page range: -

Received: Feb 10, 2024

Accepted: Jun 30, 2024

DOI: https://doi.org/10.2478/eoik-2024-0025

Keywordscentral bank digital currency, digital money, anonymity of transactions, CBDC design, privacy paradox

© 2024 Viktor Koziuk et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
central bank digital currency, digital money, anonymity of transactions, CBDC design, privacy paradox