Fidelity International Managing Director Anne Richards stressed that loss of financial privacy – and, subsequently, even access – is the number one risk for consumers to consider before adopting digital currencies from banks. plants around the world.

According to Fidelity International Anne Richards, the main consumer risk associated with the adoption of digital currency by the central bank (CBDC) relates to privacy, especially the ability to track all financial, legal or illegal activities.

“On the one hand, you want to be absolutely certain that the switch to a digital currency doesn’t increase the risk of financial crime,” Richards said during a panel on CBDCs at this week’s Singapore Fintech Festival.

“But in the same way, you don’t want the bad actors – not necessarily the governments of today but potentially the governments of tomorrow – to be able to use a CBDC as a means of tracking down and monitoring the people who get in the way or even exclude them from the financial system. ”

Risk of exclusion

In addition to reputation, privacy concerns could pose a risk of prolonged exclusion, which is contrary to popular benefits of CBDCs, such as financial incision.

“We know that in most countries of the world, including developed economies, you have a proportion of people who are already, to some extent, underserved and financially excluded,” Richards explained.

“If we move to a fully digital currency – whether it’s stablecoins or a CBDC – there is a risk that the proportion will increase even more. And it becomes even more difficult for these individuals to re-enter the financial system, which will then create considerable harm for consumers. ”

Macroeconomic risks

And more than just an impact on individuals, there are macro risks associated with “second order effects” when attempting to monitor financial activity, such as disruption of the money transmission mechanism if portfolios are invested directly. in central bank balance sheets.

“There is a risk that if we get the regulations and the structure wrong at this point, we will actually exacerbate, for example, business cycles because we have weakened some of the conventional monetary tools,” Richards said.

“I completely agree […] that confidentiality will be a key issue with regard to CBDCs ”, added Benoit Coeure, head of the innovation division of the Bank for International Settlements, who was also part of the panel. “You probably don’t want the governor of a central bank to know what kind of coffee you bought at Starbucks in the morning.”