Central bank digital currencies (CBDCs) will safeguard user data privacy and prevent its transmission to commercial platforms, according to Michael Li, a researcher at the U.S. Federal Reserve.
NEW BLOG POST: Monetizing Privacy with Central Bank Digital Currencieshttps://t.co/0yPiqZ5XLF pic.twitter.com/MVH3ZpfqZN
— New York Fed (@NewYorkFed) November 23, 2020
Li collaborated on the report with UC Berkeley economist Rod Garrett. In their view, during digital payments, firms collect customers’ personal data, whereas cash allows consumers to maintain anonymity.
The researchers noted that payment platforms and large firms can use the information for commercial purposes or to police competition; they saw CBDCs as the best successors to cash in terms of protecting consumer rights.
According to the researchers, existing cryptocurrencies lag behind central-bank digital currencies due to high transaction costs.
Earlier, Deutsche Bank analysts urged European authorities to accelerate CBDC development. In their view, in the long run digital currencies will replace cash.
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