Privacy Implications of Central Bank Digital Currencies
Jiaying Christine Jiang · Seton Hall Law Review · 2023
One hundred thirty-one countries, representing over 98 percent of the global gross domestic product (GDP), are currently exploring central bank digital currencies (CBDCs), a new form of digital money that is different from privately issued cryptocurrencies and stablecoins.As central banks worldwide grapple with CBDC design options, privacy has become a critical feature and concern.Many central banks, government agencies, nongovernmental organizations (NGOs), think tanks, and even the general public have underscored the importance of privacy in CBDC systems.Moreover, a diverse group of economists, computer scientists, engineers, and legal scholars have embarked on crafting privacy-preserving CBDC designs.But two fundamental questions appear to be overshadowed: (1) How is privacy defined in the context of CBDCs? and (2) What specific privacy challenges emerge from CBDCs? Prior to proposing solutions, a clear understanding of these concerns is crucial and necessary.This Article first adopts Daniel Solove's pragmatic approach and Helen Nissenbaum's theory of contextual integrity to conceptualize privacy within the CBDC context.Next, it examines the data flow inherent to four core CBDC designs.It concludes that the most significant privacy concern arises from central banks collecting