Central Banks Struggle With Privacy-related CBDC Headaches
As a number of countries across the globe are working on developing their respective central bank digital currencies (CBDCs), ensuring a separation between identity and transaction data could produce a better environment for privacy protection and could lead to public confidence and trust in using CBDCs, according to a recent paper released by the Bank for International Settlements (BIS).
The report is based on interviews that the BIS and the World Bank held with nine central banks exploring retail CBDCs and financial inclusion. These included the Central Bank of The Bahamas, Bank of Canada, People’s Bank of China (PBoC), Eastern Caribbean Central Bank, Bank of Ghana, Central Bank of Malaysia,The Philippines' Bangko Sentral ng Pilipinas, National Bank of Ukraine, and the Central Bank of Uruguay.
The paper points to the example of China and its CBDC project, saying that the country’s recent issuance of the personal data protection law puts more emphasis on data protection. The digital yuan, or e-CNY, is fitted with a tiered wallet design which allows the lowest category wallets to be anonymous with only phone numbers required, according to the report.
The PBoC "has noted that users’ personal information will not be shared with commercial banks or the central bank by the telecom operators," the bank said.
It further claimed that "payments can be done with tokenized 'sub-wallets' pushed to e-commerce platforms and other online-to-offline platforms, while ensuring these platforms will have no access to the personal information."
In addition to this, the PBoC claims that it has set up an information firewall, and that it strictly enforces information security and privacy protocols. These are said to include: appointing
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