Examining Privacy Tensions in Retail Central Bank Digital Currencies

Most central banks have moved from the exploration of retail central bank digital currencies (CBDCs) towards preparation and pilot initiatives. In designing retail CBDC systems, a major trade-off requires balancing the end-user preference for privacy with the protection of financial integrity. While end-user privacy and associated trade-offs are frequently discussed, related publications often focus on either technical (design-oriented) or social (adoption-oriented) aspects. As a result, the role of technologies in mitigating end-user privacy tensions emerging in these systems remains underexplored. Therefore, we first draw on socio-technical systems theory and a content analysis to identify and discuss end-user privacy tensions in retail CBDC systems. Second, we examine the role of technologies in mitigating such tensions. By shedding light on the socio-technical nature of these tensions and potential solutions in retail CBDC systems, our work supports central banks and policymakers but also provides a frame of reference for information systems researchers.