Privacy by design for public digital money (Martin Summer)

As central banks explore issuing digital currencies for public use, a critical design challenge is how to protect the privacy of the granular data trails digital payments leave behind. While privacy is widely recognised as a goal, policy debates often frame it as a trade-off with crime prevention—limiting ambition and reinforcing legacy design choices that assume privacy and enforcement are fundamentally in compatible. This risks replicating the data practices of commercial platforms in public infrastructure. This paper charts an alternative approach. Recent advances in privacy-enhancing technologies (PETs) now enable both strong privacy protec tions and verifiable compliance through programmable, rule-based auditability. By embedding such capabilities directly into system architecture, central banks can make privacy a built-in feature of digital money—strengthening institutional trust. Building on recent advances in cryptography and strategic analysis, we offer a con ceptual framework that treats privacy and auditability as distinct design dimen sions, and distil three design principles for privacy-protective CBDCs that remain compatible with enforcement needs. We also introduce a “PET dashboard” that maps specific technologies to CBDC system layers, highlighting where collaboration across central banks, academia, and industry is most needed.