The International Monetary Fund (IMF) published a report recently that warns about the very serious privacy risks associated with central bank digital currencies (CBDCs).
According to the paper, entitled “Central Bank Digital Currency Data Use and Privacy Protection,” any central bank can use its CBDC system to collect all sorts of private information about users. It could then turn that private information over to the authorities for mass surveillance and possibly persecution reasons.
“CBDC data allows for commercial exploitation while also raising the possibility of state surveillance,” the IMF warns.
The way CBDCs work is that every time a transaction is made, all sorts of private information is transferred and uploaded into the blockchain as proof. That information is then open game for government authorities and anyone else to exploit it for ulterior purposes.
“Central bank digital currency (CBDC), as a digital form of central bank money, may allow for a ‘digital trail’ – data – to be collected and stored,” the paper explains.
“In contrast to cash, CBDC could be designed to potentially include a wealth of personal data, encapsulating transaction histories, user demographics, and behavioral patterns. Personal data could establish a link between counterparty identities and transactions.”
The paper goes on to explain that there is economic value in CBDCs due to the data trail it creates. Data is considered an “infrastructural resource that can be used by an unlimited number of users and for an unlimited number of purposes as an input to produce goods and services.”
“CBDC data could potentially be harvested by financial institutions that, in turn, could help develop data-driven businesses,” the paper continues.
Hellbound and Down 