PRIVACY PREFERENCES AND TRUST IN CENTRAL BANKS: HETEROGENEITY IN CASE OF CBDC

Abstract

Broad societal uptake of Central Bank Digital Currency (CBDC) is contingent on both its design features and public confidence in the issuing central bank. Based on survey results evaluated using Likert scales, this paper puts forth quantitative metrics assessing general privacy concerns alongside those specific to digital and financial interactions. Although baseline consistency in privacy preferences is observed, it dissipates when choice complexity increases. Significantly, we find no systematic relationship between individuals' quantified privacy preference levels and their choices regarding CBDC anonymity vs. functionality, their trust in the central bank's ability to protect CBDC privacy, or their belief in central bank independence as essential for that protection. Cluster analysis identifies respondent groups displaying preference consistency, the privacy paradox, or intermediate behaviours. These findings highlight substantial preference heterogeneity under complex choices, a critical factor for effective CBDC design. Consequently, central banks should engage more deeply in understanding user preferences and promoting CBDC functionality, ensuring privacy is not overlooked.

Keywords

• CBDC
• central bank
• central bank independence
• trust
• digital money
• privacy