Question: 12. How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?

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Question

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How could a CBDC provide privacy to consumers without providing complete anonymity and facilitating illicit financial activity?

Answer

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Note: See the answers to the sections:4.4 National Privacy ConsiderationsQuestion: 04. How might a U.S. CBDC affect the Federal Reserve’s ability to effectively implement monetary policy in the pursuit of its maximum-employment and price-stability goals?.The simplest way to achieve this would rely on the existing intermediary financial institutions to continue to do what they already do in terms of Privacy, National Security, and International Security BUT with the addition of the ability to use a real-time U.S. CBDC transfer mechanism instead of only the existing Automated Clearing House (ACH) Network. This allows the existing mechanisms that are part of the existing intermediaries structure to remain in place for Privacy and Security. This of course assumes the existing mechanism on Privacy and Security is acceptable.

Examples

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For a list of desirements, see Dual Payment Networks - Examples

Discussion of Examples

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For a list of discussion of the desirements, see Dual Payment Networks - Discussion of Examples