CBDC privacy refers to the degree of anonymity or data protection afforded to users of a Central Bank Digital Currency. It concerns how personal transaction data is collected, stored, and accessed by the central bank or other authorities. The objective is to balance individual financial confidentiality with regulatory requirements for anti-money laundering and counter-terrorism financing. This aspect is a central design consideration for any national digital currency implementation.
Context
CBDC privacy is a highly debated topic in news reports about central bank digital currency development globally. The discussion involves finding an optimal design that prevents illicit activities while preserving user financial freedom. Critical future developments include technical solutions like zero-knowledge proofs or tiered access systems to transaction data. These aim to offer varying levels of privacy based on transaction size or user identity verification.
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