PREFERENCE FACTORS REGARDING CENTRAL BANK DIGITAL CURRENCY ANONYMITY: BEHAVIOURAL, CULTURAL, OR INSTITUTIONAL

Abstract

Central Bank Digital Currencies (CBDCs) offer a model of monetary order that potentially reduces the social costs associated with money circulation compared to private cryptocurrencies, which are energy-intensive. However, the success of CBDCs is contingent on design choices, which may conflict with policy goals and consumer preferences. A key challenge is the balance between transaction privacy/anonymity and payment convenience/functionality. Preferences for privacy/convenience are influenced by cultural attitudes, behavioural factors, and trust in institutions. This research seeks to address the following questions: 1) How do cultural and behavioural factors interact to shape preferences for CBDC anonymity/privacy? 2) To what extent do behavioural biases moderate cultural constraints? 3) Is there a correlation between such moderation and levels of trust? A survey (Google Forms, 19 questions) was administered to 164 respondents from Eastern Europe, Asia, and Africa. Analysis reveals that regional homogeneity in responses suggests culturally conditioned preferences. However, preferences for anonymity over convenience are significantly influenced by institutional factors beyond culture. Culture does not appear to be a decisive factor in matters of trust. In cases of lower trust in monetary institutions, preferences for convenience outweigh anonymity. The study concludes that successful CBDC design is context-specific and depends on the unique circumstances of individual countries. Central banks must understand consumer preferences within their respective countries to choose an optimal CBDC design. However, excessive focus on "marketing" to consumer preferences may undermine the central bank's role as a policymaker, while choosing the right design is crucial for CBDC's success.