Reading 2 (Tronnier 2022)

Electronic Commerce Research and Applications 53 (2022) 101158
Contents lists available at ScienceDirect
Electronic Commerce Research and Applications

journal homepage: www.elsevier.com/locate/elerap
Investigating privacy concerns and trust in the digital Euro in Germany

Frédéric Tronnier *, David Harborth , Peter Hamm
Goethe University Frankfurt am Main, Germany
A R T I C L E I N F O A B S T R A C T
Keywords: This work analyzes the influence of privacy concerns and different dimensions of currency-related trust on in-
Digital Euro dividuals’ willingness to use Central Bank Digital Currency (CBDC), specifically a digital euro. A quantitative
Central bank digital currency survey with 1034 respondents was analyzed using partial least squares structural equation model (PLS-SEM).
CBDC
Empirical results indicate that multiple antecedents are associated with privacy concerns in the digital euro that
Trust
Privacy concerns
in turn influence intention to adopt a digital euro. Especially soft trust factors such as credibility and image are
Electronic payment systems found to influence both privacy concerns and the intention to adopt a digital euro. It contributes to the current
literature by introducing trust as a second-order construct composed of hard and soft trust factors for digital
currencies. The results provide valuable insights for researchers and practitioners aiming at designing and
implementing CBDCs by demonstrating which factors need to be considered in order to achieve widespread
adoption by citizens.
1. Introduction used as digital cash equivalents for end-users with “central banks
collectively representing a fifth of the world’s population are likely to
Over the course of history, money has been an essential factor in the issue a general purpose CBDC in the next three years” (Boar et al., 2020,
lives of individuals while undergoing constant change (Rothbard, 1963). p.7).
It evolved from physical coins and banknotes to credit cards and digital CBDC have the potential to not only reshape the monetary system,
means of payment. Presently, the financial and monetary system is but to also have an impact on the level of privacy in payments for in-
facing the next, possibly revolutionary, change in money through the dividuals. Until today, cash, the exclusive type of legal tender provided
introduction of digital currencies (Bank of England, 2020). In 2009, the by CBs to individuals (European Commission, 2010), acts as the most
first cryptocurrency, Bitcoin, was launched, implementing a payment anonymous form of payment (Kahn et al., 2005). All new and digital
system which does not rely on any intermediaries (see Nakamoto, 2008) currencies or payment methods create and leave electronic records
and offers decentralized trust and a pseudonymous payment solution. In (Wadsworth, 2018, p.10), which could be tracked and monitored to
2017, a new category of digital currencies named stablecoins was counteract money laundering or other illegal activities (Wandhöfer,
introduced (Bouchaud et al., 2020), aiming to eliminate high price 2017). However, data protection, privacy and trust play an essential role
volatility, which is one issue identified for cryptocurrencies failing to in the monetary system, with privacy being identified as a crucial
operate as a medium of exchange (G7 Working Group on Stablecoins, element in the creation of a CBDC (Auer and Böhme, 2020).
2019). The European Central Bank (ECB) is presently investigating the
These developments were accompanied by a decrease in physical introduction of a digital euro, and conducted a survey among in-
cash payments, especially in developed countries such as Sweden dividuals, experts and organizations on the perception of stakeholders of
(Sveriges Riksbank, 2017). Covid-19 led to an increase in adoption of such a digital euro. Privacy in payments was identified as the primary
contactless payment options, for instance in China (CNNIC, 2019, 2021) feature demanded by the 8,221 respondents (43%), followed by security
and a drop of 20–25% drop in cash use in the Euro area (Panetta, 2021). (18%) and usability across the euro area (European Central Bank, 2021).
Central banks (CBs) did respond to these changes by increasing their Almost half of the professional respondents, including merchants, are of
attention towards Central Bank Digital Currencies (CBDC). Various the opinion that privacy would be a necessary feature for the wide
central banks are researching and piloting CBDC solutions for both adoption of the digital euro by individuals. A recent report by the Eu-
interbank payments and settlements as well as general purpose solutions ropean Data Protection Supervisor demonstrated that the European
* Corresponding author.
E-mail address: [email protected] (F. Tronnier).
https://doi.org/10.1016/j.elerap.2022.101158
Received 26 October 2021; Received in revised form 8 April 2022; Accepted 16 May 2022
Available online 18 May 2022
1567-4223/© 2022 Elsevier B.V. All rights reserved.
F. Tronnier et al. Electronic Commerce Research and Applications 53 (2022) 101158
Union is aware of the potential implications on privacy that a CBDC limit in CBDC. The majority of work however focuses on providing a
might have (Leucci and Riemann, 2021). Arguably the most important comprehensive introduction to the topic and discusses the different ra-
aspect in the relation between CBs and their respective population is tionales, benefits and limitations, of the introduction of CBDC in
trust in the currency. In their “report on the digital euro” ECB president different countries (Yao, 2018; Sidorenko and Lykov, 2019). The
Christine Lagarde states: “Our role is to secure trust in money. This means possible adoption of CBDC has been studied to a limited degree. From a
making sure the euro is fit for the digital age” (European Central Bank, central bank-perspective, various central banks discussed possible ben-
2020). The people would therefore need to trust the digital euro. Trust is efits that a CBDC might provide them in fulfilling their mandates. Such
found to be a highly complex construct whereby various types of trust benefits include an increase in payment efficiency and financial stability
exist, with researchers defining trust according to their disciplinary as well as the fostering of financial inclusion and the prevention of
worldview (McKnight et al., 2002). A first, non-academic, survey found money laundering (Bech and Garratt, 2017; Mancini Griffoli et al., 2018;
that CBs are the institution most trusted to issue digital money (Patel and Barontini and Holden, 2019). Alonso et al. (2020) study reasons for and
Ortlieb, 2020). However, prior work does not link trust to privacy against the implementation of CBDC by comparing the stated objectives
concerns, does not tie it to a specific CBDC and makes no differentiation and perceived benefits of CBDC from multiple central banks. The au-
between different factors and types of trust that might influence in- thors find that that in particular central banks from developing countries
dividuals’ willingness to use and adopt CBDC in the future. identify factors, such as financial inclusion and lower costs, that speak
We close this gap and investigate privacy concerns, trust and the for the implementation of CBDC. Kiff et al. (2020) survey the current
willingness to use a CBDC in order to provide practical recommenda- research on CBDC and create a framework to help answering central
tions related to the role of privacy and trust and to foster CBDC adoption. banks the question whether to implement a CBDC using a project
Presently, CBDC, as envisioned by various CBs, greatly differ depending management perspective.
on the CBs’ approach, the underlying technologies, employed in- The work of Bijlsma et al. (2021) differs from the literature discussed
frastructures, desired features and key objectives. These factors might previously by following a consumer-oriented approach. The authors
also influence individuals’ perceptions of the respective CBDC. As the study the possible adoption of CBDC using a Dutch consumer panel,
ECB has already published substantial information on the digital euro, finding that price incentives, trust in banks and central banks, privacy
we focus on this specific digital currency and address the following protection and knowledge on CBDC to be important potential drivers for
research questions: CBDC adoption. This work of the Dutch central bank differs from this
work as it does not follow an established scientific model in studying
RQ1: What factors contribute to individuals’ privacy concerns with CBDC adoption but surveys individuals preferred features in a CBDC.
respect to the digital euro? Money may best be defined through its core functions that are to act
RQ2: How do privacy concerns influence individuals’ willingness to as a store of value, medium of exchange and unit of account (Lo and
use the digital euro? Wang, 2014). However, with regards to CBDC, Masciandaro, (2018)
RQ3: How does trust influence behavioral intention and privacy argues that money also acts as a means of storing information. Thus, by
concerns with respect to the digital euro? transferring money, transaction-level financial data between different
parties is shared and potentially sensitive personal data is revealed (Auer
2. Literature review and Böhme, 2020). These data include spending habits, user balances
and location data, which is why user privacy is considered one of the
2.1. Central Bank digital currency most vital factors in designing a CBDC (Lannquist, 2020). In contrast to
the current – and anonymous (Kahn et al., 2005) – legal tender, digital
To define CBDC, Bech and Garratt (2017) present the framework of payment methods create and store a plethora of information through
the “Money Flower”, which differentiates between various types of each transaction (Wadsworth, 2018). Cryptocurrencies such as Bitcoin
money, based on their main properties: issuer, form, accessibility and even store all transactions on blockchains that are, depending on the
technology. The issuer can be a central bank or other private banks, specific cryptocurrency, publicly readable, making transactions pseu-
money can be digital or physical while money may be accessible to the donymous (Harlev et al., 2018). For all payment solutions, a trade-off
general public or limited to interbank transactions. Lastly, money can be between privacy and existing regulatory anti-money laundering
account-based or token/value-based, in the case of distributed ledger or (AML), counter-financing terrorism (CFT) and know-your-customer
blockchain-based money. Currently, only banknotes and coins are issued (KYC) requirements exists, often discussed with regards to crypto-
by central banks as legal tender for the general public. Bank deposits, the currencies as well as for CBDC (Wandhöfer, 2017).
other form of money widely used by the public, are issued by private Privacy in payments as a core function or requirement for a CBDC,
commercial banks rather than central banks. The digital euro can be and the focus of this work, is frequently mentioned by various central
seen as a digital form of central bank-issued money for the general banks and economic research institutions (Payments Canada, Bank of
public, with no decision taken yet on its underlying technology. In Canada and R3, 2017; Allen et al., 2020; Lannquist (2020); European
accordance with the information provided by the ECB on the digital euro Central Bank, 2021). In a public consultation with more than 8000 re-
(European Central Bank, 2020) the focus in this work lies on a retail spondents, the ECB finds that privacy concerns seem to be the most
CBDC that is to be introduced as an accessible form of digital money for important factor for individuals in a digital euro in the euro area (Eu-
the general population. The proclaimed objective hereby is to facilitate ropean Central Bank, 2021). As privacy concerns are frequently found to
online retail payments, with the digital euro not replacing cash, hinder technology adoption in information systems research (Wang, Lin
although an offline functionality for contactless payments is envisioned and Luarn, 2006; Xu et al., 2011) we seek to investigate this topic in
as a desired feature (European Central Bank, 2020). more detail for the digital euro. Only the Bank of Canada (Darbha and
In recent years, academic and central bank interest in CBDC has Arora, 2020) and the ECB (European Central Bank, 2019) have so far
soared to new heights. A literature review by Tronnier et al. (2020) published dedicated work on privacy and anonymity in CBDC (Tronnier,
analyzed both central bank and academic research on the topic and 2021). Both CBs focus on evaluating technological options to create a
found that both groups rarely consider societal aspects and implications higher level of privacy in payments. One proposed solution is the use of a
of CBDC. Instead, most research focuses on monetary policy and eco- limited amount of anonymity vouchers for small value transactions,
nomic aspects. Additionally, design properties are frequently discussed while higher value transactions are audited by a dedicated authority.
to study the implication of certain features on the banking system. For Similarly, recent academic works focus on the development of privacy-
instance, Yanagawa and Yamaoka, (2019) of the Bank of Japan study the sensitive CBDC solutions (Goodell et al., 2021; Gross et al., 2021) from a
effect of an interest bearing CBDC, as well as the installation of a holding technical perspective, but do not study privacy concerns and their
2
influence on intended usage. Lee et al. (2021a), Lee et al. (2021b) review number of models were established. Most notably, this includes the
privacy and security-related aspects in blockchain-based CBDC and concern for information privacy (CFIP), internet users’ information
differentiate between identity-and transaction privacy. The authors privacy concerns and the antecedents, privacy concerns and outcomes
create a classification of different privacy-preserving techniques that are (APCO) (Smith, Dinev and Xu, 2011; Dinev et al., 2015) models as well
discussed in existing work on CBDC. Atako (2021) advocate for a privacy as the privacy calculus (Laufer and Wolfe, 1977). Bernstein (2017)
framework for retail CBDC by reviewing the US Privacy Act of 1974 and studies the evolution of observation and the historical change in
propose refining it to maintain balance between privacy and trans- research on transparency and privacy in management theory. The
parency in digital payments. Similarly to privacy, central banks and author finds that observation shifted from observing outcomes to
researchers often mention trust as a core business requirement that observing individual activities as well as a shift from the observation of
needs to be extended towards a CBDC (European Central Bank, 2020; technology by humans towards technology know monitoring in-
Patel and Ortlieb, 2020; Lee et al., 2021). The Official Monetary and dividuals. A differentiation between various forms of privacy is made, e.
Financial Institutions Forum (OMFIF) published a survey on trust in g., between temporary or permanent transparency and consensual or
digital currencies in 2020, showing that central banks are the entity mandated transparency. These concepts serve further work for the
most trusted in issuing a digital currency (Patel and Ortlieb, 2020). conceptualization of different roles of blockchain technology (Sarker
Using only a very limited number of questions, the study found that et al., 2021). Within these roles of for instance regulation or disclosure
attitudes towards payment options depend on the demographic char- technology, the purposes of data collection and the subsequent pro-
acteristics of respondents, with respondents from emerging markets cessing activities of the data are explained.
being more likely to embrace digital currencies than respondents in Privacy concerns in payment systems have scarcely been researched.
developed countries. These findings however are based on digital cur- Bandara, Fernando and Akter (2020) conducted a systematic literature
rencies in general and not aimed specifically at CBDC. review on privacy concerns in the e-commerce context, whereby pay-
ment methods and technologies are discussed only superficially. With
2.2. Technology adoption and privacy concerns regards to privacy concerns, the authors argue that more research is
necessary to evaluate whether consumer trust in emerging decentralized
A plethora of research studied adoption of electronic and mobile cryptocurrency payments differs from that of traditional e-payment
payments (Zhou, Lu and Wang, 2010; Bhatiasevi, 2016; de Kerviler, methods. Reith et al. (2020) study the effect of privacy on the acceptance
Demoulin and Zidda, 2016; Harris, Chin and Beasley, 2019) as well as of mobile payment solutions by adapting the APCO model, originally
cryptocurrency usage and adoption (Alzahrani and Daim, 2019; developed by Smith, Dinev and Xu (2011). Smith, Dinev and Xu (2011)
Esmaeilzadeh et al., 2019; Alharbi and Sohaib, 2021). To this end, provide a comprehensive and interdisciplinary review on privacy by
existing models such as the technology acceptance model (TAM) (Davis, assessing 320 articles and 128 books on the topic. Based on their review,
1989) and the unified theory of acceptance and use of technology which clusters the work into three main research areas, the authors
(UTAUT and UTAUT2) by Venkatesh et al., (2003) are being utilized. develop a macro model to study privacy concerns, the APCO model. The
These models have been extended and modified using additional con- model states that privacy concerns are influenced by a variety of ante-
structs and factors with privacy concerns and trust are found to be cedents (such as demographics, awareness, prior privacy experiences
important factors in prior work that focuses on usage intention in online and cultural differences), and that these concerns in turn influence
and mobile payments (see Slyke et al., 2006; Slade et al., 2015). Solberg outcome variables such as behavioral intention or willingness to use a
Söilen and Benhayoun (2022) study CBDC adoption using UTAUT and technology. Additionally, the model also evaluates privacy concerns as
extending it with the construct of trust in the digital currency system. The an independent variable for outcomes, modeled as dependent variables.
authors find that performance expectancy, trust and social influence are Behavioral intention to use is found to be the most important outcome
factors that are positively associated with intended CBDC use. variable as Venkatesh et al. (2003) found it to predict actual technology
However, the focus of most of these models and studies are not pri- acceptance.
vacy concerns in itself but rather technology adoption or usage inten- In summary, prior findings on CBDC demonstrated that privacy is a
tion. Acceptance factors for mobile payments have been extensively crucial factor for individuals in the adoption and usage of a future CBDC.
researched using long-established technology acceptance models, with While there exist validated models to study privacy concerns and tech-
new research providing only limited new insights (Dahlberg, Guo and nology adoption, to the best of our knowledge, privacy concerns in
Ondrus, 2015). Thus, this work focuses on privacy concerns of in- CBDC have not been studied yet. In this work, we close this research gap
dividuals towards using a digital euro by evaluating factors that impact by investigating potential antecedents and outcomes of privacy concerns
privacy concerns, as well as the importance of trust in a digital currency. in a specific CBDC, the digital euro.
The concept of privacy is highly subjective and various definitions
and types of privacy exist (Giancarlo et al., 2020). For instance, Mal- 3. Methodology and hypotheses
hotra, Kim and Agarwal (2004) define privacy as a users’ subjective
view of fairness in dealing with personal data. Smith, Dinev and Xu In this work, we adapt the overarching APCO model to study privacy
(2011) argue that privacy cannot be measured directly as it is based on concerns in the digital euro with a focus on the different dimensions of
individuals’ perceptions, experiences and knowledge. Thus, privacy trust in a currency and follow prior work which states that trust is an
concerns were introduced as a surrogate to measure privacy (Smith, antecedent of privacy concerns (Dinev and Hart, 2006; Harborth and
Dinev and Xu, 2011). Smith, Dinev and Xu, (2011) and Bélanger and Pape, 2021). All constructs have been adapted from prior work in order
Crossler (2011) provide comprehensive reviews on the subject. In this to ensure validity and reliability. In the following, all constructs are
work, we adopt the notion of privacy of personal data as the demand of introduced to form the hypotheses of this work. We address research
an individual to control sensible data (at least to some degree) that is question one regarding the factors influencing privacy concerns through
possessed by other parties and to keep certain information private. the hypotheses H1 to H5, which study established antecedents of privacy
Following Dinev and Hart (2006), privacy concerns may be defined as a concerns. The second research question, on the influence of privacy
users’ concerns about the loss of privacy due to (in)voluntary disclosure concerns on willingness to use, is addressed through hypotheses H6 and
of personal data (Dinev and Hart, 2006). Privacy concerns are found to H7, which survey the influence of perceived benefits and limitations –
be an vital factor for behavioral intention and actual adoption behavior privacy concerns – of a digital euro. Lastly, research question three,
(Smith, Dinev and Xu, 2011; Xu et al., 2011) and a crucial construct in regarding the influence of trust on privacy concerns and willingness to
information systems research on privacy (Bélanger and Crossler, 2011; use a digital euro, is addressed through the hypotheses H8 to H11.
Chen and Chen, 2015). To evaluate and measure privacy concerns, a Different dimensions of trust are established and their influence on
3
Fig. 1. Depicts the research model with the respective hypotheses addressing the three research questions of this work. Research Model for the digital euro.
privacy concerns and willingness to use is evaluated. Fig. 1 depicts the found by Krasnova et al. (2009) and confirmed for big data by Alashoor
research model with the respective hypotheses addressing the three et al. (2017). Thus, in this work, we argue that awareness of the digital
research questions of this work. euro leads to a decrease in privacy concerns with respect to the digital
euro.
3.1. Antecedents H1 Awareness of the digital euro is negatively associated with pri-
vacy concerns regarding the digital euro.
We adapt the antecedent privacy (victim) experiences of the original Prior work is ambiguous regarding the effect of privacy victim expe-
APCO model (Smith, Dinev and Xu, 2011) as well as the antecedents self- riences on privacy concerns (Lowry et al., 2011; Malhotra et al., 2004).
efficacy, perceived control and perceived vulnerability of the work from However, privacy victim experiences act as an antecedent in the original
Alashoor et al. (2017), who investigate privacy concerns in the context APCO model, and research on internet scam victimization involving
of big data. The authors reviewed information systems (IS) privacy financial payments showed a positive association between being an
literature and derived the construct perceived control from the theory of internet scam victim and privacy concerns (Chen et al., 2017). There-
planned behavior (TPB) (Ajzen, 1991) and perceived vulnerability and fore, we aim to verify past findings and argue that past privacy victim
self-efficacy from protection motivation theory (PMT) (Floyd, Prentice- experiences positively influence privacy concerns with the digital euro.
Dunn and Rogers, 2000). We argue that these constructs are also rele- H2 Privacy victim experiences of individuals are positively associ-
vant for digital euro payments and transactions, as will be discussed in ated with privacy concerns regarding the digital euro.
the following. Prior work regards information control as a crucial aspect of infor-
The authors show that privacy issues have been raised in the context mation privacy (see Culnan and Armstrong 1999; Smith et al., 1996).
of big data and provide evidence that awareness increases privacy Recently, the General Data Protection Regulation (GDPR) was intro-
concerns (Smith, Dinev and Xu, 2011). Although the digital euro has not duced in the EU precisely with the aim to put individuals back in control
been implemented yet, the topic has already been covered in the media, over their personal data (European Commission, 2018b). Several studies
with a public consultation held by the ECB. The ECB clearly communi- found evidence on the negative influence of perceived control on privacy
cated the possible design options and the expected use of a digital euro concerns (Krasnova et al., 2009). Prior research furthermore indicates
in its report (European Central Bank, 2020) which was largely covered that German citizens exhibit a stronger preference for privacy regulation
in the media (See for instance Pladson, 2021). We argue that awareness which relates to the perceived control of German individuals over their
of the digital euro impacts privacy concerns as individuals form per- data, as compared to US citizens (Dogruel and Jöckel, 2019). Thus, we
ceptions about the digital euro based on their awareness of it. Indeed, hypothesize:
awareness might have a positive or negative influence, depending on the H3 Perceived control over the digital euro is negatively associated
individual and the information that individuals have formed on the with privacy concerns regarding the digital euro.
digital euro. While there exists no indication for CBDC on this issue, a Similarly, perceived vulnerability describes the risks that individuals
negative relationship between internet literacy and privacy concerns may associate with the usage of the digital euro. Evidence for its positive
was found by Dinev and Hart (2005) while a positive relationship was effect on privacy concerns is found in prior work (Dinev and Hart, 2004;
4
Alashoor et al., 2017) Therefore, a positive association between H7, Privacy concerns are negatively associated with the behavioral
perceived vulnerability and privacy concerns is hypothesized. intention to adopt the digital euro.
H4 Perceived vulnerability through the digital euro is positively Maintaining trust in money is one of the essential tasks of central
associated with privacy concerns regarding the digital euro. banks (European Central Bank, 2020). Angino et al. (2021) review
The antecedent self-efficacy refers to the ability of an individual to existing literature on trust in central banks and argue that it is an
cope with perceived privacy threats created through the digital euro. essential factor for the successful application of monetary policy by a
Maddux and Rogers (1983) studied self-efficacy and argued for its central bank such as inflation management. Trust in central banks is also
importance in privacy protection motivation. Self-efficacy is found to needed to demonstrate and ensure the legitimacy of a central bank, such
influence the intention to adopt coping behaviors and to positively as the ECB (Angino et al., 2021). The average level of trust in the ECB
predict internet security intentions (Tsai et al., 2016). Moreover, self- differs between countries with Italy, the Netherlands or Portugal
efficacy is found to negatively influence privacy concerns (Alashoor demonstrating higher average level of trust than Germany, which in turn
et al., 2017). scores higher than France or Greece (Bursian and Fürth, 2015). The
Thus, we hypothesize that self-efficacy negatively influences privacy authors further find that socioeconomic factors such as political leaning
concerns as individuals demonstrate perceived competence to cope with and low education are associated with a decrease in ECB trust, with trust
privacy threats introduced through the digital euro. generally decreasing in all countries following the global financial crisis
H5 Self-efficacy is negatively associated with privacy concerns in the of 2008. Angino et al. (2021) additionally find sub-national differences
digital euro. in social trust, using the World Values Survey (WVS) that influence trust
Lastly, the original APCO-model considered demographic and in ECB.
personality-related differences as antecedents of privacy concerns. In academic research, trust is widely found to positively influence
Junglas et al. (2008) studied the influence of the “Big Five” personality individuals behavioral intentions, such as the intention to provide per-
traits in location-based services, finding agreeableness, conscientious- sonal information online (Dinev and Hart, 2006). The authors also find
ness, and openness to influence privacy concerns. In this work, the 10- that trust might be able to counteract the negative influence of privacy
item short version survey by Rammstedt and John (2007) is used to concerns. In the context of online payments, it is found to positively
measure extraversion, neuroticism, agreeableness, conscientiousness influence purchasing behavior (Pavlou and Fygenson, 2006). Smith
and openness. As additional antecedents, age, gender, education, annual et al. (2011) note that trust is modeled differently in various studies.
household income and global information privacy concerns (Malhotra et al., Trust is modelled as a mediator between privacy concerns and outcomes
2004) were also surveyed. (Alashoor et al., 2017), as an antecedent for privacy concerns, perceived
benefits and perceived risks (Li et al., 2014), as well as an antecedent for
3.2. Privacy concerns behavioral intentions (Dinev and Hart, 2006). Gao and Waechter (2017)
study initial trust in mobile payment adoption using the information
Privacy concerns are predicted by a set of antecedents while the systems success (ISS) model and a modified TAM model. The model
construct itself is used as an indicator for privacy-related behavior such identifies perceived information quality, system quality and service
as self-disclosure and behavioral intentions (Smith et al., 2011; Alashoor quality as important facilitators for initial trust in mobile payments.
et al., 2017), and are closely linked to the concept of the privacy cal- Szumski (2020) surveys the difference in trust between different pay-
culus. Within the calculus, individuals deliberately make a trade-off is ment methods, such as cash, credit cards, online and mobile banking as
made between privacy risks (and concerns) and benefits (Laufer and well as cryptocurrencies finding online banking to be the payment so-
Wolfe, 1977). Based on Xu et al. (2013), who showed that privacy risks lution with the highest level a trust. Women are found to display a
predict privacy concerns, Dienlin and Metzger (2016) conceptualize higher degree of inconvenience over the sharing of transaction-related
privacy concerns as cost in a privacy calculus. We adopt this method and information compared to men. The work by Solberg Söilen and Ben-
argue that the digital euro is seen as beneficial if it offers individuals a hayoun (2022) studies CBDC adoption using the UTAUT model in a
convenient and useful form of currency that is preferable over existing survey whereby the authors include trust in the digital currency system as a
and traditional payment methods and hypothesize: factor that influences intention to use and actual use behavior. Trust is
H6 Perceived benefits are positively associated with the behavioral found to be positively associated with intended CBDC usage.
intention to adopt the digital euro. Wonneberger and Mieg (2011) studied different aspects of trust in
currency and divided these aspects into hard, soft and idealistic factors
3.3. The role of trust and the behavioral intention of a currency, following the work of Tyszka and Przybyszewski (2006).
Based on literature on currency systems, the authors derive twelve
For the outcomes of the research model, privacy concerns act as an important features for money that are then divided into two subgroups.
independent variable while behavioral reactions act as the dependent Hard factors of trust in money relate to the economic factors of money
one. Hereby, a distinction needs to be made between behavioral inten- that directly relate to the core functions of money as a medium of ex-
tion (BI) and actual behavior or the actual acceptance of a technology. change, unit of account and store of value, while soft factors encompass
As the digital euro has not been implemented as of yet, it is not possible social and technical aspects of trust, such as trust in the security of a
to measure actual CBDC usage behavior. In the information systems (IS) system and the credibility of an entity (Wonneberger and Mieg, 2011).
domain the gap between the two concepts is widely known as the As the authors focused on a regional currency, a third group of idealistic
“privacy-paradox” with respect to privacy concerns of individuals factors such as regionality and ecological aspects have also been studied
(Barnes, 2006), while older research argued that behavior follows but are not applicable to this work. Thus, we adopt six factors and
intention (Fishbein and Ajzen, 1975). Venkatesh et al. (2003) showed operationalize trust as two reflective-formative (type II) second-order
that willingness to use acts as the most important construct to measure constructs (Becker et al., 2012) that influence both privacy concerns
actual technology acceptance. Privacy concerns were found to nega- and behavioral intention. Hard factors hereby include perceived
tively influence the behavioral intention to use a technology (Smith liquidity, stability and fungibility of the digital euro, with issuer and
et al., 2011) or online services (Angst and Agarwal, 2009) specifically in currency credibility, system security and image being soft factors. We
online banking (Lee, 2009), mobile payment (Huang and Liu, 2012), decided to choose the reflective-formative second-order construct (type
cryptocurrencies (Alharbi and Sohaib, 2021) and in actual behavior (Son II) as the different trust concepts from the literature represent different
and Kim, 2008). Thus, we hypothesize that privacy concerns negatively trust dimensions in the digital euro. This differentiation allows us to
influence the intention to adopt the digital euro as a currency, specif- derive optimal practical recommendations for the development of the
ically as a means of payment. digital euro. As social indicators are found to be appreciated more
5
Table 1 3.4. Data collection

Demographics descriptive statistics.
Gender N Percent Education N Percent The survey was conducted in Germany through a professional market
research institute, respondi.com, certified by ISO 20252. All constructs
N Percent Without general school 4 0,39%
leaving certificate (1) and items were translated into German by a DIN EN 15,038 and ISO
Female 498 48,16% Lower secondary 99 9,57% 17,100 certified institute and then verified by multiple native language
education (2) speakers. We utilized quotas following the EUROSTAT 2018 (European
Male 533 51,55% Secondary school (3) 281 27,18% Commission, 2018a) survey to gather a representative sample of the
Other 3 0,29% University entrance 307 29,69%
qualification (4)
German adult population regarding age and gender distribution. Lime-
Annual household income Bachelors’ degree (5) 120 11,61% Survey was used as the survey solution.
Less than 90 8,70% Masters’ degree and 211 20,41% Respondents were initially given an introductory text on expected
10.000€ (1) equivalent (6) and communicated properties of the digital euro, based on the infor-
10.000€ to 115 11,12% PhD and higher (7) 11 1,06%
mation provided by the ECB. Through this introductory text, partici-
19.999€ (2)
20.000€ to 112 10,83% No answer 1 0,10% pants should gain an understanding on the digital euro and form
29.999€ (3) expectations on its functioning and qualities (Table 6. 2082 respondents
30.000€ to 130 12,57% Age participated in the survey, of which 1034 completed surveys are
39.999€ (4) analyzed in this work. Respondents were discarded if they failed to
40.000€ to 122 11,80% 18–29 222 21,47%
49.999€ (5)
answer control questions correctly or if their respective quota in terms of
50.000€ to 103 9,96% 30–39 199 19,25% gender and age had already been filled. Control questions tested for both
59.999€ (6) attention and the introductory information given beforehand. The
60.000€ to 140 13,54% 40–49 202 19,54% objective was to ensure that respondents had obtained a basic under-
79.999€ (7)
standing of the digital euro. In total, the sample consists of 498 females
80.000€ to 63 6,09% 50–59 238 23,02%
99.999€ (8) and 533 males with a median age of 45. The age distribution is a close
100.000€ to 55 5,32% 60 and older 173 16,73% approximation of the overall age distribution of Germany for both males
149.999€ (9) and females, excluding minors. Thus, our sample is representative for
more than 13 1,26% Mean 43.93 the German population. Table 1. depicts the demographics and
150.000€
descriptive statistics while Table 2 depicts descriptive statistics on the
(10)
No answer 91 8,80% Median 45.00 constructs based on respondents’ willingness to use in order to demon-
strate significant differences between individuals that are or are not
willing to use a digital euro.
strongly than economic indicators in peoples’ view towards money
(Musil, 2005), we hypothesize that soft trust factors exert a stronger ef- 4. Findings
fect on the use intentions than hard trust factors.
H8: Soft trust factors are stronger negatively associated with privacy We use structural equation modelling (SEM) to assess our research
concerns regarding the digital euro than hard trust factors. model. The two main approaches for SEM are partial least squares SEM
H9: Hard trust factors are negatively associated with privacy con- (PLS-SEM) and covariance-based SEM (CB-SEM) (Hair et al., 2011). As
cerns regarding the digital. we are among the first ones – to the best of our knowledge – to predict
H10: Soft trust factors are stronger positively associated with will- use intentions of the digital euro, our research is by definition highly
ingness to use the digital euro than hard trust factors. exploratory with respect to the target construct BI. Furthermore, the
H11: Hard trust factors are positively associated with willingness to goal of our research is to maximize the explained variance for this target
use the digital euro. variable. Thus, we use PLS-SEM for our analysis (Hair et al. 2011; Lowry
and Gaskin, 2014; Hair et al., 2017). The structural model was tested
Table 2
Descriptive statistics for groups based on willingness to use (Asymptotic significance: *0.05).
Group 1 Group 2 Mann-Whitney-U test
(Likert less than 2.52) (Likert greater than 2.52)

N = 531 N = 503
Construct M Mdn SD M Mdn SD U Z r
Age 45.54 48 14.10 42.40 43 14.30 116720.00 −3.507* −0.11

Education 4.028 4 1.32 4.14 4 1.31 126323.00 −1.550 −0.05
Income 4.45 4 2.36 5.09 5 2.41 94033.50 −12.628* −0.13
Awareness 2.85 3 1.33 3.30 3 1.24 107988.00 −5.465* −0.17
Perceived Control 4.04 4 1.00 4.08 4 0.88 132926.50 −0.139 −0.00
Perceived Vulnerability 4.15 4 0.89 3.44 4 0.96 78652.00 −12.002* −0.37
Self-Efficacy 2.49 3 0.94 3.33 3 0.88 73055.50 −13.345* −0.41
Privacy Victim Experience 1.47 1 0.72 1.39 1 0.72 124650.00 −2.283* −0.07
Privacy Concerns 4.14 4 0.91 3.39 4 0.98 75835.50 −12.628* −0.39
Perceived Benefits 2.36 2 0.91 3.40 3 0.68 52423.00 −18.05* −0.56
Trust hard factor 2.90 3 0.71 3.60 3.6 0.55 59418.50 −15.527* −0.48
Trust soft factor 2.53 2.6 0.79 3.50 3.4 0.66 46819.00 −18.135* −0.56
GIPC 3.42 3 1.02 3.03 3 0.94 104968.00 −6.241* −0.19
Extraversion 3.10 3 1.01 3.24 3 0.94 123548.50 123548.50* −0.07
Agreeableness 3.12 3 0.85 3.26 3 0.74 123366.00 123366.00* −0.07
Openness 3.64 4 1.01 3.60 4 0.94 128024.00 128024.00 −0.04
Neuroticism 2.85 3 1.02 2.87 3 0.88 130643.00 130643.00 −0.02
Conscientiousness 4.01 4 0.80 3.86 4 0.80 119824.50 119824.50* −0.09
6
Table 3 Table 4
ICR and AVE of reflective constructs. Path estimates (Statistical significance: *0.05, **0.01, ***0.001).
Construct Cronbach’s α Composite reliability AVE Variable Path Coefficient
DV: Privacy DV: Willingness to
Awareness 0.917 0.941 0.800
Concerns Use
Willingness to Use 0.914 0.934 0.706
Benefits 0.807 0.887 0.724 Adjusted R2 0.668 0.644
GIPC 0.934 0.950 0.792 General information privacy 0.277***
Perceived Control 0.785 0.842 0.647 concerns
Perceived Vulnerability 0.924 0.943 0.770 Age 0.046*
Privacy Concerns 0.949 0.963 0.868 Gender −0.013
Self-Efficacy 0.829 0.921 0.853 Income −0.018
Soft Trust Factors Conscientiousness 0.041*
Credibility 0.742 0.885 0.794 Extraversion −0.015
Image 0.746 0.887 0.797 Neuroticism 0.024
Hard Trust Factors Openness 0.003
Fungibility 0.486 0.793 0.658 Agreeableness 0.016
Stability 0.598 0.831 0.711 Awareness (H1) −0.023
Big 5 Personality Traits Perceived control (H3) 0.027
Extraversion 0.785 0.871 0.701 Perceived vulnerability (H4) 0.466***
Agreeableness 0.127 0.634 0.519 Privacy victim experience (H2) 0.01
Openness 0.603 0.834 0.715 Self-efficacy (H5) −0.115***
Neuroticism 0.667 0.844 0.733 Hard Trust Factors (H8/H10) 0.056 0.167***
Conscientiousness 0.469 0.766 0.631 Soft Trust Factors (H9/H11) −0.155*** 0.290***
Privacy concerns (H7) −0.122***
Benefits (H6) 0.404***
using SmartPLS version 3.3.3 (Ringle, Wende and Becker, 2015) and
further data analyses were done with SPSS. We aim to predict specific
target constructs in our structural equation model (in our case privacy from deleting them. Lastly, we assess the discriminant validity, i.e., the
concerns in the digital euro and willingness to use the digital euro). Conse- degree of uniqueness of a construct compared to other constructs (Hair
quently, we use PLS-SEM for our analysis instead of CB-SEM which is et al., 2011). We evaluate the cross-loadings and apply the Fornell-
oftentimes used for theory testing (Hair et al., 2011). The computations Larcker criterion. The square root of the AVE of each of our constructs
were done with the path weighting scheme with a maximum of 300 it- is larger than the correlation with other constructs which indicates
erations and a stop criterion of 10−7. For the bootstrapping procedure, discriminant validity. Due to problems in determining the discriminant
we used 5000 bootstrap subsamples and no sign changes as the method validity based on cross-loadings and the Fornell-Larcker criterion, the
for handling sign changes during the iterations of the procedure. heterotrait-monotrait ratio (HTMT) was proposed as a new measure
(Henseler et al., 2015). HTMT divides between-trait correlations with
within-trait correlations. This gives us a measure of what the true cor-
4.1. Measurement model assessment relation between two constructs would be if the measurement is
assumed to be flawless (Hair et al., 2017). Values close to 1 for HTMT
All first-order constructs in the structural model are measured signal a lack of discriminant validity. A conservative threshold is 0.85.
reflectively. Thus, we evaluate the internal consistency reliability, No value is above the suggested threshold of 0.85, except for the
convergent validity and discriminant validity to properly assess the formative relations between the second-order trust constructs and their
constructs and evaluate our hypotheses (Hair et al., 2011). Internal respective sub-dimensions. However, HTMT as well as the other mea-
consistency reliability (ICR) is assessed by calculating Cronbach’s α and sures cannot be applied to formative constructs which explains these
the composite reliability. Values for Cronbach’s α and composite reli- results (see Henseler et al. 2015, p. 131 for a discussion on discriminant
ability should be between 0.7 and 0.95 as our research was build using validity for formative measures).
widely verified constructs and models. Table 3 depicts the results for the As a next step, we controlled for common method bias using Har-
two measures. man’s one-factor test in accordance with Podsakoff et al. (2003). Of the
There are problematic values for Cronbach’s alpha for the first-order 49 factors used, 12 had an Eigenvalue greater than 1. The largest factor
constructs making up the second-order construct hard factor trust, i.e., accounted for 25.59% of the cumulative variance, substantially lower
fungibility and stability. This indicates that the single items of these than the 50% threshold for common method bias.
constructs may not measure the same construct or that there are not
enough items per factor. However, the compositive reliability is
acceptable and the constructs are not established ones from the litera- 4.2. Structural model assessment
ture but yielded acceptable results in the work of Wonneberger and Mieg
(2011). Considering that the loadings are above 0.7 with an average Collinearity seems to be no issue in our model with a maximum inner
variance extracted (AVE) larger than 0.5, we argue that the constructs VIF equal to 3.165. We do however find higher inner VIF values between
are reliable. Furthermore, we find that some of the constructs of the big the second-order construct soft trust factors, image and credibility, indi-
5 personality scale are also yielding low alpha values (agreeableness, cating that both constructs need to be investigated and disentangled in
extraversion). However, as this is an established scale for measuring the future. The results for the path coefficients of the structural model
personality traits, we decided against deleting one of the two items for can be found in Table 4. The values for the adjusted R2 are 64.4% for
agreeableness and extraversion as the AVEs are above 0.5 and the willingness to use the digital euro and 66.8% for privacy concerns. Fig. 2
composite reliability values are deemed acceptable. depicts the overall research model of this work including path co-
Convergent validity is given if the outer loadings are larger than 0.7 efficients and adjusted R2 values.
and the AVE is larger than 0.5. The only items below 0.7 are item 6 of In addition to analyzing the direct effects in our model, we also
willingness to use (0.657), item 1 of perceived control (0.607), item 2 of include an assessment of the total effects (direct plus indirect effects of
agreeableness (0.325), item 1 of conscientiousness (0.619) and item 2 of variables on respective dependent variables) in order to trace other
extraversion (0.296). Besides the items in the big 5 scale for which rea- relevant relationship in the model. The total effects are shown in
sons to keep them were already given, the AVEs are larger than 0.5 with Table 5.
the other constructs and the loadings are close to 0.7. Thus, we refrained The analysis finds that hard and soft factors of trust both exert
7
Fig. 2. Depicts the overall research model of this work including path coefficients and adjusted R2 values. Research Model for the digital euro.
the material provided by the ECB at the time of the questionnaire. The
Table 5
digital euro has not been implemented yet, respondents were therefore
Total effects.
unable to assess its technical functioning or additional features beyond
Total Effect Effect Size P-Value the information provided by the ECB. Thus, respondents could only
Soft Factors Trust -> Behavioral Intention 0,309 0,000 voice their perceived privacy concerns without certainty over the exact
Hard Factors Trust -> Behavioral Intention 0,160 0,000 level of transparency that digital euro payments would exhibit. More
Awareness -> Behavioral Intention 0,003 0,254
knowledge on the different types of privacy with regards to a digital euro
Prior privacy victim experiences -> Behavioral Intention −0,001 0,592
Perceived Control -> Behavioral Intention −0,003 0,268
could lead to a clearer view of privacy concerns by the individual. This
Perceived Vulnerability -> Behavioral Intention ¡0,057 0,000 includes a differentiation in digital euro payments with respect to
Self-efficacy -> Behavioral Intention 0,014 0,001 consensual or mandated and temporary or permanent payment trans-
Age -> Behavioral Intention −0,006 0,042 parency, as outlined by Bernstein (2017).
Regarding RQ1 we find that awareness of the digital euro, privacy
significant direct and indirect (mediated via privacy concerns) effects on victim experiences and perceived control do not have a significant effect on
the willingness to use the digital euro. Furthermore, we find that privacy concerns (H1 – H3 not confirmed). This indicates that for our
perceived control, self-efficacy and age are statistically significant. How- German respondents, past privacy victim experiences are not linked to
ever, all three effect sizes are too small to be considered relevant. the digital euro, confirming previous findings by Malhotra et al. (2004).
Finally, perceived vulnerability has a significant negative total effect, This might be explained with the fact individuals do not link past
mediated via privacy concerns, on the willingness to use the digital euro. financial privacy victim experiences with (retail) banks or other finan-
Thus, the higher the perceived potential risks associated with revealing cial service providers with a central bank and the digital euro. The high
personal information by using the digital euro as a payment method, the median value of perceived control demonstrates that respondents would
less willing are the participants to use the digital euro. only use a digital euro if they remain in control over the sharing of their
personal and financial information. The fact that perceived control does
not significantly influence privacy concerns could indicate that control
5. Discussion and conclusions
over personal data is seen as a prerequisite for respondents before even
thinking about using it for payments.
The results of this work need to be discussed with the current level of
As discussed earlier, prior research indicated that awareness of the
information on a digital euro in mind. Respondents were given an
digital euro could have been positively or negatively associated with
introductory text on the digital euro that introduces the topic based on
8
privacy concerns. The findings suggest that awareness is not relevant in digital euro. Respondents did not demonstrate that they are concerned
the context of this study. This indicated that respondents did not need to about a lack of liquidity of the digital euro, nor did they fear price
be aware of the possibility of a digital euro to form opinions about it. A fluctuations. These factors, e.g., the acceptance of the digital euro in all
possible explanation could be that respondents did equate their opinions of Europe (Liquidity), are not directly related to privacy concerns as this
on other digital payment methods that they know, such as mobile pay- trust dimension does not encompass the transfer of data and information
ment solutions or cryptocurrencies, to the digital euro. Similarly, their in any way. This is opposed to soft trust factors such as Credibility where
attitudes towards digital privacy, for instance in the context of smart- trust in the central banks’ ability to handle data is included. While both
phones or social media, could have been applied towards a digital euro. factors positively influence willingness to use, the effect is found to be
These hypotheses need be investigated in more detail in the future as higher for soft factors. A reason might be the fact that individuals might
respondents could have created a strong mental link between a digital take the hard trust factors of a digital euro for granted and expect them,
euro and other payment systems or digital technologies which could also given their experiences with cash and banknotes that have already
influence adoption. proven to be stable and highly liquid. As the digital euro does not exist
Perceived vulnerability and self-efficacy have significant effects on yet and the ECB could not yet prove that it can successfully create and
privacy concerns in the digital euro (confirming H4 and H5). Individuals implement a reliable and secure digital currency, soft trust factors might
who believe that their data could be misused by different actors exhibit be more crucial for individuals. Again, these findings need to be un-
stronger privacy concerns, while individuals who feel that they can cope derstood in the context of the sample, consisting of German citizens. The
with privacy threats demonstrate lower privacy concerns. This is in line work of Patel and Ortlieb (2020) demonstrates that trust in central banks
with prior findings that demonstrate that German users feel less able to is similarly strong in advanced economies such as Japan, France, the US
control their personal information than US users (Dogruel and Jöckel, and Germany (Patel and Ortlieb, 2020, p.7). Emerging markets, such as
2019). Regarding demographics, we find that older respondents exhibit Russia or India, demonstrate much higher degrees of trustworthiness for
significantly higher privacy concerns, as do respondents that scored high central banks as well as for retail banks, other payment service providers
on the conscientiousness personality trait. However, both constructs are and big tech companies. Such other entities in the payment market are
only significant at the 0.05 level, with beta coefficients much lower than generally regarded as untrustworthy in European countries, whereby
those of other constructs. No significant differences were found with French and Italian citizens generally demonstrate higher degrees of
regards to respondents’ gender, education or other personality traits. untrustworthiness than German citizens. The findings of Bursian and
Regarding RQ2 we find that privacy concerns negatively influence Fürth (2015) indicate that European countries are comparable with each
individuals’ willingness to use the digital euro (confirming H7). Thus, other in trust in the ECB. The German average level of trust in ECB is
these results are in accordance with prior findings on other payment hereby between that of France, with a lower average level of trust and
methods and online technologies in which privacy concerns are found to that of the Netherlands, Ireland and Portugal, with a higher average
negatively affect usage intention in individuals. This finding is also in level of trust in ECB. While the findings of Angino et al. (2021)
line with the previous report of the ECB in which respondents, especially demonstrate that there are differences between Euro area regions, e.g.
from Germany, chose privacy in payments to be their most important trust in ECB is found to be lower in Eastern Germany than in Western
feature in a digital euro (European Central Bank, 2021). It has to be Germany, we argue that our results are applicable to the German pop-
emphasized that these findings are not generalizable towards all in- ulation, given the age and gender distribution of our sample. However,
dividuals worldwide. Prior research indicates that German citizens the impact of the different types of trust investigated in this work on
demonstrate a particular liking for privacy protection and expect more privacy concerns and willingness to use might differ between countries.
damage and a higher probability of violations of privacy, for instance as For instance, it could be argued that hard trust factors, which can be
compared to US citizens in the case of social networks (Krasnova and understood as the core functions of a central bank, might be of higher
Veltri, 2010). Similarly, German users exhibit a higher preference for importance for countries in which legal tender is lacking in these
privacy regulation and less perceived control over their smartphone data properties. While advanced economies with stable currencies might see
compared to US users (Dogruel and Jöckel, 2019). these properties as already fulfilled prerequisites, this may not the case
Furthermore, we find evidence for the privacy calculus as perceived for all countries.
benefits positively influence use intentions, confirming H6. Perceived
benefits demonstrate the strongest effect of all variables in our analysis, 6. Contributions and implications
emphasizing the importance of a proper communication and education
strategy about the benefits of the digital euro in the future. It is of To the best of our knowledge, this work is the first to investigate the
particular importance that a digital euro possesses features that offer a effects of individuals’ privacy concerns and trust perceptions on their
competitive advantage against existing payment methods. The digital intention to use the digital euro in Germany. Existing research is
euro needs to be convenient, that is easy to use as well as useful, in order currently focused on technical and legal issues of different types and
to be widely accepted. To create a competitive advantage, these factors forms of CBDC. With respect to privacy and anonymity in payments,
would need to be more pronounced than in existing payment solutions. current research investigates frameworks on how to best create a
For instance, a digital euro might be more convenient than cash if it is privacy-sensitive CBDC (Goodell et al., 2021; Gross et al., 2021) without
accepted for physical payments in stores as well as online payments in e- considering the factors that cause privacy concerns and their influence
commerce context. A highly convenient digital euro would require no on adoption. Although our findings are not generalizable to other IT-
credit card but only a smartphone, which most users already possess. Of artefacts, we argue that our results are generalizable to the German
course, privacy-friendliness also represents a potential perceived benefit population. With the findings on comparable levels on trust in the ECB
of a digital euro, especially for countries who highly value privacy. (Bursian and Fürth, 2015) and the strong preference for privacy from
Regarding RQ3 we find that soft trust factors indeed demonstrate a German users and respondents (Krasnova and Veltri, 2010; European
stronger influence on privacy concerns and willingness to use the digital Central Bank, 2021) in mind, our results can serve as a first approxi-
euro than hard trust factors (confirming H9 and H11). H8 could not be mation for privacy concerns in CBDC of other countries within and
confirmed as hard trust factors are found to not significantly affect outside the Euro area. Thus, we contribute to the literature by deriving a
privacy concerns in the digital euro. However, results indicate that they causal research model and proposing a new second-order trust construct
significantly affect the willingness to use the digital euro (confirming to explain CBDC adoption. We could demonstrate that trust in money is a
H10). This demonstrates that soft trust factors are regarded as much multifactorial construct whose factors differ in their influence on the
more important for individuals than hard trust factors of a digital euro constructs of privacy concerns and willingness to use a currency or
with respect to both privacy concerns and the willingness to use the technology. Our findings show that the differentiation of trust in soft and
9
hard factors is crucial for the investigation of digital currencies as it Table 6

enables us to provide more detailed practical recommendations. Questionnaire items (All items measured on a 5-point Likert scale. Definitions
For central banks, the findings of this work lead to several implica- and items adapted from Alashoor et al. 2017 if not otherwise indicated) and
tions for the successful development and implementation of a CBDC. We introductory text.
show that privacy concerns are influenced by a set of antecedents that Construct Definition Item
need to be considered when developing a privacy-sensitive CBDC. Pri- Awareness of the Awareness of the term I am familiar with the term
vacy concerns need to be addressed by central banks as they are found to digital euro digital euro including its “digital euro”.
negatively influence individuals’ willingness to use a CBDC. We find that implications for central I am aware that the digital
perceived vulnerability and self-efficacy influence privacy concerns which banks and individuals. euro is created by the
European central bank.
implies that central banks should aim to put individuals in control of the I am aware that central
amount and type of data that is transferred when using the digital euro banks are researching
in order to increase self-efficacy and reduce perceived vulnerability. The digital equivalents of their
proposed solution using “anonymity vouchers” as imagined by the ECB national currencies, e.g.,
the digital euro.
(European Central Bank, 2019) to allow for a specific amount of private
I understand the meaning of
transactions in digital euro might therefore act as a suitable option to let the term “digital euro.”
individuals control a limited number of anonymous transactions. Perceived control The perceived ability to I would only use the digital
Alternatively, the use of privacy enhancing techniques, such as Zero- control personal data euro if the system allowed
Knowledge-Proof (ZKP), used in the proposed solution by Gross et al. provided in transactions me to control the
using the digital euro. information that financial
(2021), could provide a suitable solution to overcome privacy concerns.
institutions can use from
We recommend to alleviate privacy concerns and increase use intentions me.
by fostering soft trust factors which include strategies to improve the Being able to control the
image and credibility of the central bank and its respective CBDC. The personal information that I
provide by paying with the
ECB should continue to inform transparently about their status of
digital euro is important to
research on the digital euro to increase credibility and trustworthiness. me.
As credibility is linked with the competent handling of data, the flow of I would only provide
information in digital euro transactions should be clearly communi- accurate personal and
cated. This includes not only the types and frequency of data but also the financial information for
payments with the digital
parties to which data is transferred as well as the circumstances of data
euro if the system is
transfer. controlled by a reputable
Focusing on hard trust factors such as fungibility and stability may party.
not reduce privacy concerns and increases willingness to use less Perceived vulnerability The perceived potential I could be subjected to
risks associated with malicious IT security
strongly than improving soft trust factors. Practically, central banks need
revealing personal problems (e.g., virus,
to work on improving soft trust factors, instead of strengthening their information by using the privacy, identity theft,
core competencies which are included in the hard trust factors. Lastly, digital euro as a payment hacking) when using the
central banks should ensure and communicate possible benefits of a method. digital euro.
CBDC, such as usability, convenience and transaction speed (European I feel my payment
information could be
Central Bank, 2020; Lannquist (2020)).
misused when using the
digital euro.
7. Limitations and future work I feel my personal
information could be made
available to unknown
Our results are limited as the survey was conducted solely in Ger-
individuals or companies
many. Thus, cultural differences, especially in countries with differing without my knowledge if I
perceptions about online privacy may play an important role. We aimed use the digital euro.
to mitigate these issues by utilizing market research institutes to gather a I feel my personal
representative sample of the German population in terms of age and information could be made
available to government
gender distribution. Our findings demonstrate that personality traits and agencies when using the
gender play only a very limited role in explaining privacy concerns and digital euro.
willingness to use the digital euro, which could serve as an indication I feel my personal
that the model could also be applicable for other countries and CBDC, information could be
inappropriately used if I use
although the study should be replicated within different countries and
the digital euro.
cultures. While German citizens are generally found to be privacy- Self-efficacy Competence and I believe I have the ability
sensitive, their trust in the ECB is found to be relatively comparable to confidence to cope with to protect my personal
other citizens within the Euro area. Additionally, respondents might be privacy threats by paying information when using the
subject to self-report biases as the protection of one’s privacy is regarded with a digital euro. digital euro.
It is easy for me to take
as socially expected. The fully anonymized survey aimed to mitigate this privacy measure features by
issue. Lastly, the digital euro has not been introduced yet. Respondents myself when using the
therefore had to form opinions on a CBDC that they could not yet truly digital euro.
evaluate with respect to its features, technical design and privacy- Privacy concerns in the Concerns about I am concerned that
digital euro (Adapted opportunistic behavior information on my
friendliness. To address this issue, participants were provided with
from Dinev and Hart related to personal purchasing behavior
supplementary information, based on official ECB documents on the 2004) information submitted (bought products,
digital euro, prior to the survey. Furthermore, we were required to when using the digital purchasing frequency,
measure intentions instead of more favorable measures of actual use euro. credit score) could be used
behavior. This is especially relevant to consider as a limitation due to the in a way I did not foresee
when using the digital euro.
intention-behavior gap for privacy-related studies (Crossler et al., 2013).
(continued on next page)
Future work should investigate these phenomena in more detail by
differentiating between different perceived benefits of a CBDC and
10
Table 6 (continued ) Table 6 (continued )

Construct Definition Item Construct Definition Item
I am concerned that from using digital financial

personal information services?
relating to my identity Perceived Benefits Perceived benefits I prefer the digital euro over
(name, address, personality associated with the digital other payment methods
traits) could be used in a euro such as traditional online
way I did not foresee when banking.
using the digital euro. The digital euro offers a
I am concerned that convenient payment
unknown organizations or method for online
individuals get access to my payments.
information when paying The digital euro is a useful
with the digital euro. payment method.
I am concerned about Before starting the survey, please read the following information carefully:
paying with the digital euro What is the digital euro and why might it be introduced?
because of what others The European Central Bank (ECB) is currently discussing the introduction of a
might do with my digital euro in Europe within the next five years.The digital euro is intended to act as
information. an additional means of payment for electronic transactions for private individuals. It
Trust (Adapted from The extent to which users With the digital Euro you is being discussed by central banks to keep pace with the digital payment behavior
Wonneberger and are confident that central can be sure that it will be of citizens.
Mieg 2011) banks will handle their accepted everywhere in The digital euro serves as a supplement to cash and is not intended to replace it!
personal information Europe. (Liquidity – Hard The digital euro would be created by the central bank. It is likely that many
competently, reliably, Factor) companies and businesses will accept the digital euro as a payment option.
and safely when using the The digital Euro is suitable The digital euro would be a legal tender.
digital euro. for shopping and making The technical system through which digital euros would be created and exchanged
purchases. (Fungibility – would be built by the ECB in conjunction with other retail banks.
Hard Factor) The goal is to create a secure, efficient, accessible, privacy-friendly and compliant
The digital Euro is a good payment solution that could be used throughout Europe.
investment asset. How can you use the digital euro?
(Fungibility – Hard Factor) Imagine that such a digital euro could be used in a similar way to existing payment
The digital Euro is a stable solutions such as online and mobile banking, and payment services such as PayPal.
currency. (Stability – Hard The digital euro could be transferred between individuals for peer-to-peer (P2P)
Factor) payments or used as a means of payment between buyers and sellers via apps or web
The price of one digital interfaces.
Euro equals the price of one Existing retail banks would offer accounts or wallets where individuals store their
physical euro. (Stability – digital euros. When a purchase or sale is made, these accounts or wallets are debited.
Hard Factor) For the following questions, imagine that you want to buy a particular product
The digital Euro is secure, online that costs about €100. The seller offers several payment options, including
cannot be forged. (Security the digital euro. You can process this transaction through a website or an app,
– Soft Factor) similar to existing payment options.
The creation of new digital
euros is trustworthy.
(Credibility – Soft Factor) considering the multiple dimensions and constructs for trust in CBDC
Central banks handle that might differ from traditional types of money. This includes the
personal information
submitted by individuals in
differentiation between trust in the currency, the underlying technology
a competent fashion. and related stakeholders. Lastly, differences in privacy concerns and
(Credibility – Soft Factor) trust could not only be measured and compared between countries and
I have positive emotions different CBDC but also between different digital payment solutions,
with regard to the digital
such as cryptocurrencies and digital payment services created by large
euro. (Image – Soft Factor)
Central banks are technology providers.
trustworthy. (Image – Soft
Factor) CRediT authorship contribution statement
Willingness to use the Behavioral intention to I am willing to use the
digital euro use the digital euro as a digital euro
currency. After reading the
Frédéric Tronnier: Funding acquisition, Project administration,
introductory information Data curation, Visualization, Writing – original draft, Writing – review &
on the digital euro I am editing, Software. David Harborth: Conceptualization, Resources, Su-
willing to try it. pervision, Software, Validation, Writing – review & editing. Peter
I will prefer the digital euro
Hamm: Conceptualization, Validation, Formal analysis, Writing – re-
over other currencies and
payment solutions. view & editing.
I will use the digital euro for
everyday online payments. Declaration of Competing Interest
I will the use the digital
euro as a safe storage for my
money.
The authors declare that they have no known competing financial
Based on the information interests or personal relationships that could have appeared to influence
given, the digital euro will the work reported in this paper.
replace the payment
methods that I am currently
Appendix
using.
Privacy victim Past privacy victim How frequently have you
experience experiences with digital personally been the victim Table 6
financial services of what you felt was an
improper privacy invasion
11
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Electronic Commerce Research and Applications 53 (2022) 101158

Contents lists available at ScienceDirect

Electronic Commerce Research and Applications

Investigating privacy concerns and trust in the digital Euro in Germany

Table 1 3.4. Data collection

(Likert less than 2.52) (Likert greater than 2.52)

Age 45.54 48 14.10 42.40 43 14.30 116720.00 −3.507* −0.11

hard factors is crucial for the investigation of digital currencies as it Table 6

Table 6 (continued ) Table 6 (continued )

I am concerned that from using digital financial

References J. Comput.-Mediat. Commun. 21 (5), 368–383. https://doi.org/10.1111/

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