Private, yes. Anonymous, no. In the race to bring central bank digital currencies (CBDCs) into the mainstream, key questions revolve around how they will be issued, accounted for and tracked. At issue, then, is whether individual recipients and users would have anonymity as they spend the digital currencies. As of yet, there are no global, standardized rules that would guide how banks would issue or operate the CBDCs.
But there have been at least some attempts to offer up frameworks that would govern (at least) regional issuance, as a majority of central banks have been exploring — or are actively debuting — those digital currencies.
Back in October, the Bank for International Settlements (BIS) offered a general framework for digital currencies. The BIS noted that “a CBDC could provide a complementary central bank money to the public, supporting a more resilient and diverse domestic payment system. It might also offer opportunities not possible with cash while supporting innovation.”
More recently, earlier this month, China proposed global rules that might govern how CBDCs should operate. Those rules touch on how the CBDCs would be used, how they would be monitored and how data would be collected in connection with their usage. People’s Bank of China (PBOC) Director General of the Digital Currency Institute Mu Changchun presented the new rules at a recent BIS seminar. The official said that CBDCs should be interoperable, and that data flow should be synchronized to help regulators monitor those transactions.
As The Block reported, Mu also has said that “a completely anonymous central bank digital currency (CBDC) is not an option.” Instead, as the Chinese central bank issues its own form of the digital yuan, there will be “controllable anonymity” as a key feature, in a bid to satisfy anti-money laundering and anti-terrorism financing efforts.
ECB Seeks To Dispel CBDC ‘Myths’
Also in a nod to large-scale frameworks, ECB Board Member Fabio Panetta said in a blog post that there are several misconceptions about the digital euro: that the European central bank intends to abolish cash, that a digital euro would displace banking intermediaries, and that the digital euro “would not be based on a visible business model.”
As Panetta said in the post: “First of all, it is not yet decided whether a digital euro will be introduced at all. We are still exploring the possibility and considering it conceptually. Later this year, the ECB’s Governing Council will decide whether or not we should launch a project to get ready to issue a digital euro. Even if we decide to do so, it would simply mean that we want to be prepared. A decision to actually issue a digital euro would come at a later stage.” He added that a digital euro would seek to complement cash, not to replace it.
In addition, he wrote, “Unlike private companies or data-hungry tech firms, central banks do not seek to maximize profits. We have no interest in personal data or market dominance … The digital euro, if it were introduced, would respect privacy and would be available free of charge. Its availability would facilitate digital payments in all corners of the euro area.”
BoJ Just Looking, For Now
Separately, in terms of individual CBDC initiatives, the Bank of Japan said this month that it has been holding meetings to explore digital currencies, though there are no concrete plans for issuance at present.
In an announcement, the bank said that though there is “no plan to issue central bank digital currency (CBDC), from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the bank will prepare thoroughly, including implementing experiments, to respond to changes in circumstances in an appropriate manner. In the course of CBDC exploration, the bank considers it important to apply the knowledge of various stakeholders, such as the private sector, experts and relevant public authorities. With this in mind, the Bank of Japan has established a “Liaison and Coordination Committee on Central Bank Digital Currency.’”
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