A Theory Model of Digital Currency with Asymmetric Privacy

The author thanks Lin William Cong, Christophe Dubach, Darrell Duffie, Antonio Fatas, Rod Garratt, Charles M. Kahn, Nobuhiro Kiyotaki, Cyril Monnet, the Associate Editor, and three anonymous referees, as well as audiences at the 5th Annual CBER Conference at NYU Stern School of Business, the Simpson Centre Conference in Honor of Nobu Kiyotaki’s 70th Birthday, the CEPR Fintech and Digital Currencies RPN Workshop: A Changing Financial Landscape, the Deutsche Bundesbank/Bank of Canada International Conference on Payments and Securities Settlement: Data and Information Conference, the 2nd Annual Conference for the Business of Blockchain Technology at Miami Herbert School of Business, the Bank of Estonia Christmas Conference and the Economics of Payments Conference organized by the Federal Reserve Board for valuable comments and suggestions. The author also thanks seminar audiences at the Bank of Canada, McGill University, Queen’s University, University of Dauphine, Bocconi University, and Morgan Stanley for valuable comments and suggestions. This paper builds on a paper coauthored with Christophe Dubach (McGill University’s Electrical Engineering and Computer Science Department) written for the Bank of Canada’s Model X Challenge, which called for Finance and Computer Science collaboration to make proposals for a Canadian Central Bank Digital Currency design. The original policy and technical implementation-oriented version is available at SSRN (see Tinn and Dubach 2021). The author thanks the Bank of Canada for having selected this project among the Model X winners, and for their financial support and fruitful discussions at the early stages of this research. Note that the views expressed in this paper do not represent the official view of the Bank of Canada.