CBDCs and Privacy Are Not Mutually Exclusive: ConsenSys Exec
When industry members complain about invasive surveillance that comes with CBDCs, some say it’s too early in the game to make that judgment
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One of the biggest arguments against creating a central bank digital currency, or CBDC, in the US revolves around privacy, but proponents counter that the industry has the power to create a better design.
When industry members complain about invasive surveillance that comes with CBDCs, Mark Young, chief risk officer and data adviser at ConsenSys, says it’s too early in the game to make that judgment.
“A [US] CBDC does not exist yet, so how are you saying that,” Young said at the Milken Institute Future of Digital Assets Symposium in Washington, DC, Thursday. “The onus is on us to design what we want and to design something that demonstrates democracy.”
Consumers and industry members tend to look at other country’s CBDC attempts to form options on the type of asset, namely China, whose digital yuan launched last year. There are 114 central banks around the world currently in some stage of development for a CBDC, Jennifer Lassiter, executive director of the Digital Dollar Project, said.
“In terms of what’s motivating those countries, it varies…each country prioritizes certain principles over the other, but those are competition and innovation, inclusion, cybersecurity, financial stability, and privacy,” Lassiter said.
Seeing other countries move forward with projects helps model how different structures could work, she added.
“I think because of that, as we’re seeing each country develop from a technical standpoint, each of their CBDCs, understanding how to build privacy into the different layers, or not, is really important because I think that is what will give them a competitive edge,” Lassiter said.
It’s all about the design, Young agreed, arguing the central bank and private partners — the Boston Branch of the Federal Reserve is currently working with MIT on its CBDC research — have the power to innovate new privacy-focused technologies.
“[A CBDC] has the potential to be even more private than a fiat dollar,” Young argued.
In terms of value added from CBDCs, Young and Lassiter agreed there is huge potential for improving settlement times, efficiency and security, but the projects have to be built with these principles in mind.
“I have a very simplistic definition of privacy in the context of CBDC,” Young said. “The use of that digital asset does not constitute consent to any undue corporate tracking, or government surveillance.”
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