Transaction level governance #Transparancy in Central #Bank Digital Currencies

CBDC designs, besides the efficiency and speed of payments, must consider a balance between privacy, anonymity, and future payment needs. Through leveraging digital technologies and infrastructure, CBDCs can offer benefits such as instant payments, 24/7 availability, lower transaction costs, and improved financial inclusion. However, CBDC raises concerns regarding sensitive personal data security, privacy, anonymity, and sovereignty. While implementing CBDCs pegged to and backed by fiat can bring benefits such as safer payment services, operational resiliency, and real-time reserve management, it also introduces new challenges of data governance and transparency.

In a CBDC system, where transactions and financial data are processed and recorded, there is a need to establish clear rules and regulations regarding data access, control, and usage. More transparency at the organizational level may be required, and a more granular approach, such as atomic transaction-level governance to ensure accountability and consistency.

Transaction-level Data governance in a CBDC may address concerns about who has access to transactional data, how it is stored and protected, and how data usage is regulated. The governance at the atomic level may balance anonymity, and privacy, as the CBDC system needs to provide the necessary visibility for oversight and regulatory purposes without compromising individuals' sensitive information.

?Transactional-level governance can provide transparency, accountability, and user empowerment in automated transaction processing in a multi-organizational environment. It can also create a trail of authorization, authentication, access controls, data-sharing mechanisms, and real-time permission management within regulated markets.

It is important for the stakeholders involved, including central banks, regulatory bodies, and technology providers, to establish clear guidelines, regulations, and privacy frameworks to ensure that data is collected, processed, and used responsibly and securely while also providing individuals with #transparency and control over their financial information.

In a central bank digital currency (#CBDC) system, the specifics of who has access to financial #data, usage, security, and processing are critical.?

1. Access to financial data: Financial data should be limited to authorized entities such as the central bank, financial institutions, and regulatory bodies. These entities typically require access to perform specific functions like transaction processing, anti-money laundering (AML) measures, or financial oversight. Access should be granted based on defined roles, responsibilities, and regulatory frameworks.
2. Use of financial data: The use of financial data should be governed by strict regulations and guidelines to protect individual privacy and prevent unauthorized or inappropriate use. Financial data may be used for transaction verification, fraud prevention, compliance with AML and counter-terrorism financing (CFT) measures, and statistical analysis.?
3. Storage of financial data: Financial data should be stored securely in robust and well-protected systems. The storage infrastructure should adhere to industry best practices and may involve encryption, access controls, and regular security audits to ensure data protection.
4. Data security: Data #security is a crucial aspect of a CBDC system. Measures such as encryption, firewalls, intrusion detection systems, and secure communication protocols should be implemented to safeguard financial data from unauthorized access, tampering, or theft. Regular security assessments and audits are necessary to identify and address vulnerabilities promptly.

Transaction-level governance will enable data auditability. It will provide independent audits and oversight that can help ensure that data processing and storage comply with established standards and regulations. This can enhance trust and confidence in the CBDC system by demonstrating that appropriate safeguards are in place.

#Consent will be a critical path in the CBDC world, and consent governance audibility may enable transparancy. Consent governance will outline who can access transactional data and for what purposes. Users will have control over their data and will also have the ability to revoke consent if desired.