Central Bank Digital Currency and Privacy: A Randomized Survey Experiment


Summary

Focus

This study considers designs of central bank digital currency (CBDC) concerning privacy protection and data governance. We conduct a randomised survey experiment and find that privacy protection is among the key features to consider in the design of CBDC.

Contribution

We use the randomised survey experiment of a nationally representative sample of over 3,500 participants from Korea. We measure how willingness to use CBDC changes with the degree of anonymity and privacy protection. We also measure whether willingness to use CBDC increases with the provision of information on the potential privacy benefits of using CBDC. Our results indicate that the public’s willingness to use CBDC greatly depends on the privacy-preserving aspects of CBDC.

Findings

The main findings of the paper are as follows. First, the privacy-preserving variations of the CBDC design have significant effects on the willingness to use CBDC when respondents purchase privacy-sensitive products (eg psychiatric services, adult products). Second, the willingness to use CBDC substantially increases with the provision of information about the privacy benefits of using it. Finally, these effects vary with respondents’ trust in public or private institutions with regard to privacy protection and their demographic characteristics.


Abstract

Privacy protection is among the key features to consider in the design of central bank digital currency (CBDC). Using a nationally representative sample of over 3,500 participants, we conduct a randomized online survey experiment to examine how the willingness to use CBDC as a means of payment varies with the degree of privacy protection and information provision on the privacy benefits of using CBDC. We find that both factors significantly increase participants’ willingness to use CBDC by up to 60% when purchasing privacy-sensitive products. Our findings provide useful insights regarding the design and the public’s adoption of CBDC.

JEL classification: E40, E50, C90

Keywords: central bank digital currency (CBDC), privacy, randomized online survey experiment

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