Central bank digital currencies give more people access to banking services, but are too intrusive, according to an analyst at the Alan Turing Institute in London.
Researchers at The Alan Turing Institute, while studying the likely implications of introducing central bank digital currencies to the economic life of society, called for a public discussion of privacy concerns. They concluded that the hasty adoption and release of the CBDC could drastically narrow the already small boundaries of people’s privacy.
CBDC, a digital form of currency issued by a central bank, exists in many countries including the UK, Singapore, South Africa and Canada. She is becoming more and more popular. Over the past couple of years, 14 countries have begun practical testing and integration of national currencies into their economic model, and more than 50 countries have announced that they have advanced far in the research and development stage:
“The widespread adoption of CBDCs will dramatically increase the amount of data generated by everyday transactions. This is dangerous because by choosing the wrong technology, we can end up with a state, even a democratic one, that knows all the ins and outs, preferences, incomes and transactions, and as a result will have even more power over your privacy.”
According to the researchers, before embarking on the practical implementation of CBDC, three key questions must be answered. Namely: what functions of the digital currency of central banks will contribute to the expansion of access to financial services; how CBDC can provide a reasonable level of anonymity for accounts and transactions; how will the generated data be processed, stored and eventually destroyed?
“Central bank digital currencies have the potential to be financially inclusive by offering users easy access to financial services and low transaction costs. However, this may entail a loss of privacy and an invasion of privacy that we believe should not be at risk,” said Andrea Baronchelli, Head of Token Economics at The Alan Turing Institute.
Recently, the National Bank of Denmark questioned the intentions of the central banks of developed countries to introduce state cryptocurrencies. The Danish regulator emphasized that the government is not motivated to launch a digital version of the Danish krone, since the country is already considered the leader in the use of digital money.
Source: Bits
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