Privacy concerns around CBDCs are misplaced

PHILIP MIDDLETON

There are many possible arguments against the introduction of a central bank digital currency, especially in jurisdictions with sophisticated payments infrastructure employing various public and private payments instruments. CBDCs are often dismissed as a solution in search of a problem. However, the objection that seems to command the greatest volume and emotion is the alleged threat that CBDCs pose to the privacy and indeed liberty of the citizen.

The UK House of Lords Committee, in a largely sceptical report on the desirability of a sterling CBDC, raised the spectre of a digital currency as ‘an instrument of state surveillance’. A survey of European consumers conducted by the Bank for International Settlements identified public concern about unspecified threats to privacy posed by CDBC, and a European Union consultation paper on a digital euro has explicitly cited the issue.