Monetizing Privacy with Central Bank Digital Currencies

Rodney Garratt and Michael Lee

No 20201123, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In prior research, we documented evidence suggesting that digital payment adoptions have accelerated as a result of the COVID-19 pandemic. While digitalization of payment activity improves data utilization by firms, it can also infringe upon consumers’ right to privacy. Drawing from a recent paper, this blog post explains how payment data acquired by firms impacts market structure and consumer welfare. Then, we discuss the implications of introducing a central bank digital currency (CBDC) that offers consumers a low-cost, privacy-preserving electronic means of payment—essentially, digital cash.

Keywords: central bank digital currencies; privacy; market structure; data (search for similar items in EconPapers)
JEL-codes: D14 E5 G2 (search for similar items in EconPapers)
Date: 2020-11-23
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pay
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