There have been a few publications that explore privacy enhancing technologies (PETs) for payments and central bank digital currency. The latest paper on the topic from the Bank for International Settlements (BIS) takes a different approach. It starts from first principles and explores the inherent tension between law enforcement and privacy evangelists and how this can be addressed. Unfortunately, there is no silver bullet, but it provides direction for future research.
First off it looks at the different stakeholders involved in payments, including users, merchants, banks and payment providers. It concludes that only three really matter from a privacy perspective: privacy advocates, law enforcement and data holders.
Refreshingly, it does not assume that privacy advocates are inherently dodgy. “We consider a type of privacy enthusiast who is law-abiding and affirms that crimes can be deterred with effective law enforcement, yet believes that errors, breaches, and overreach are a potential future concern.” Of course, law enforcement prefers easy access to payments data for investigations.
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