The digital economy, privacy, and CBDC

Arbeitspapier

We study a model of financial intermediation, payment choice, and privacy in the digital economy. Cash preserves anonymity but cannot be used for more efficient online transactions. By contrast, bank deposits can be used online but do not preserve anonymity. Banks use the information contained in deposit flows to extract rents from merchants in need of financing. Payment tokens issued by digital platforms allow merchants to hide from banks but enable platforms to stifle competition. An independent digital payment instrument (a CBDC) that allows agents to share their payment data with selected parties can overcome all frictions and achieves the efficient allocation.

Object Details

• ISBN: 978-92-899-5111-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2662

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Central Bank Digital Currency ; Privacy ; Payments ; Digital Platforms ; Financial Intermediation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ahnert, Toni ; Hoffmann, Peter ; Monnet, Cyril
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2022

Further information

• DOI: doi:10.2866/284946
• Handle: http://hdl.handle.net/10419/264487
• Last update: 10.03.2025, 11:45 AM CET