Study shows Australians value privacy over safety with CBDC

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Australians are willing to pay more in transaction fees to boost the privacy of the proposed digital dollar, a new study has found.

The study by the Reserve Bank of Australia (RBA) explored the merits of a central bank digital currency (CBDC) in the country by gauging how much more consumers would be willing to pay for certain aspects such as safety, privacy, and data sharing.

The RBA found that Australians have little regard for safety as a factor in choosing a CBDC. According to the central bank, this is because the country’s commercial banks are considered extremely safe by the consumers, and therefore, they wouldn’t find the need to switch from the current system to a CBDC just for extra safety.

“For Australians to value a retail CBDC enough to justify issuance, our results suggest the CBDC would need to deliver a value proposition other than safety,” RBA’s report noted.

The central bank found privacy to resonate more with the respondents. An average Australian was willing to part with $3 annually for an account that shares data only with the Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial crime authority. The most appealing option was sharing data only with AUSTRAC and a commercial bank, with consumers ready to pay $6.5.

“Privacy settings appear a more consequential issue,” the RBA concluded. “The average consumer values transaction anonymity and, to the extent that transaction data do need to be shared with other entities, the average consumer cares about who those entities are.”

The RBA’s findings align with studies conducted by other central banks, which found that, on average, consumers don’t care whether their accounts are held with the central or commercial banks. Dutch consumers are outliers; however, a study revealed they are more likely to choose a CBDC because it’s offered directly by the central bank.

Privacy is, however, critical to consumers everywhere, studies have found.

While central banks consider privacy a feature they can use to attract more users to CBDCs, critics have used it to campaign against these digital currencies. In the United States, legislators have tabled bills in Congress and State Senates to outlaw the digital dollar for its perceived lack of privacy.

The latest attempt by Sen. Ted Cruz (R-Texas) alleges that the government will use the digital dollar to “infringe on our freedom and intrude on the privacy of citizens to surveil their personal spending habits.”

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: CBDCs are more than just digital money