Missing Key: The Challenge of Cybersecurity and Central Bank Digital Currency

This report examines the novel cybersecurity implications that could emerge if the United States or another country issues a Central Bank Digital Currency (CBDC). Central banks consider cybersecurity a major challenge to address before issuing a CBDC. The United States Federal Reserve (Fed) sees securing both the dollar and the international financial system as a core national security imperative. According to Atlantic Council research, currently 105 countries have been researching and exploring the possible issuance of CBDCs, with fifteen in pilot stage and ten fully launched. Of the Group of Twenty (G20) economies, nineteen are exploring a CBDC with the majority already in pilot or development. This raises immediate questions about cybersecurity and privacy. A government-issued digital currency system could, but does not necessarily need to, collect, centralize, and store massive amounts of individuals’ sensitive data, creating significant privacy concerns. It could also become a prime target for those seeking to destabilize a country’s financial system. …

As part of the privacy question, policy makers must decide when, whether, and how users will prove their digital identity to access a potential CBDC. This report outlines how different CBDC designs can rely, among other access solutions, on conventional digital versions of current identification credentials, knowledge-based cryptographic keys, or a mix of different approaches. Policy makers’ decisions regarding digital identities are broader than CBDCs, but the design choices will once again determine what type of CBDC architectures are possible. Thus, policy makers should include considerations about the cybersecurity profile of a potential CBDC when deliberating the future of digital identification.

Quelle / Link: Missing Key: The Challenge of Cybersecurity and Central Bank Digital Currency

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