CBDCs Are Likely to Make You Less Anonymous
Central bank digital currencies (CBDCs) are coming, while several are already here. For central banks, they provide a means of lubricating and digitalizing the global economy, with a November report from JPMorgan and Oliver Wyman concluding that CBDCs could save companies USD 100bn per year.
However, with China’s CBDC -- which is in advanced testing -- featuring capabilities that enable it to have an expiry date and to monitor spending, central bank digital currencies raise the worrying possibility that they could be used to restrict privacy. This is something that the European Central Bank (ECB), at least, appears to be aware of, with the ECB recently publishing a range of privacy options for its potential CBDC, from the basic to the very private.
Unfortunately, a range of commentators tell Cryptonews.com that it can’t be taken for granted that the ECB -- or any other central bank -- will opt for the most privacy-preserving options when launching a CBDC, particularly in light of the need to ensure high anti-money laundering compliance. And with more than a few governments having less-than impeccable records as far as human rights and civil liberties go, there’s also a good chance that a significant portion of CBDCs will be used to invade privacy.
Given the size and influence of the European Union, the privacy options outlined by the ECB are instructive as to what real-world CBDCs are going to look like in much of the developed world.
The ECB outlined three options. The first is its “baseline scenario,” which stipulates that the identities of people/entities transacting are transparent to the intermediaries involved in the transaction, such as a private bank and the ECB itself. This is to ensure that the use of a CBDC
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