How do privacy concerns impact actual adoption of central bank digital currency? An investigation using the e-CNY in China

Abstract

<abstract> <p>Central Bank Digital Currencies (CBDC) are being researched in academia and piloted by central banks around the world. Initial research highlights the importance of privacy concerns on adoption intention in CBDC. We took one step further and investigated the link between privacy concerns and adoption using the Chinese CBDC and digitalized version of the Yuan, the e-CNY. We integrated and applied the established Antecedent Privacy Concerns and Outcomes (APCO) model with the Task-Technology Fit model in a quantitative online-questionnaire with 682 Chinese participants to study the influence of privacy concerns on CBDC usage. The data was analyzed using partial least squares structural equation modeling (PLS-SEM) to identify significant path coefficients and effects in the developed model. The findings demonstrated that several antecedents significantly influenced privacy concerns, which in turn influenced e-CNY usage. In particular, perceived vulnerabilities impacted privacy concerns, while soft and hart trust factors were found to neither impact concerns or usage. When compared to prior research, the distinction between intention to use and usage of CBDC, under consideration of privacy concerns, seemed to be negligible. The often discussed 'privacy-paradox' could not be observed for CBDC. Observed differences in antecedents and other factors may have been due to cultural, political, and demographic factors, as well as different CBDC design choices. For practitioners, the results further emphasized the need for a privacy-friendly implementation of retail CBDC, which efficiently communicated user benefits while rebutting perceived vulnerabilities.</p> </abstract>