The Bank for International Settlements (BIS) Innovation Hub has presented the final report on its “private CBDC” initiative, Project Tourbillon. The prototypes, built in the project’s framework, could allow payment anonymity for central bank digital currency transactions.
The 46-page report, published on Nov. 29, explores the notions of privacy, security and scalability on the material of two prototypes based on the designs of one of the pioneers of cryptography, David Chaum. The prototypes were called eCash 1.0 and eCash 2.0. While the former provides “unconditional payer anonymity,” the latter has “more resilient” security features.
According to the report authors, “it is feasible to implement a CBDC that provides payer anonymity while combating illicit transactions.” Project Tourbillon achieves it with the complete anonymity of the consumer during the transaction with the merchant:
“A consumer paying a merchant with CBDCs is anonymous to all parties, including the merchant, banks and the central bank.”
The merchant’s identity in this scheme is known to the payer and is only disclosed to the merchant’s bank as part of the payment. The central bank doesn’t see any personal payment data but can monitor CBDC circulation at an aggregate level.
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However, in the first stage, all users must undergo a Know Your Customer (KYC) procedure at a commercial bank to use the CBDC. The merchant’s bank remains responsible, as in a current financial system, for ensuring that transactions comply with regulatory requirements such as AML, CFT and combating tax evasion.
The report concludes that Tourbillon’s payment process is easy to integrate into today’s payment landscape as it uses existing technologies such as QR codes, proof-of-stake (PoS) protocols and account relationships between customers, merchants, banks and central banks.
The BIS is spearheading global CBDC adoption, assisting the Swiss National Bank in wholesale CBDC development and collaborating on joint platforms with central banks of China, Hong Kong, Thailand, and the UAE. It is also working on a transaction tracker proof-of-concept with the European Central Bank and other projects.
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Source: https://cointelegraph.com/news/bis-innovation-hub-private-cbdc-project
