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BIS Innovation Hub presents its ‘private CBDC’ project

The Cointelegraph ​

Cryptocoins News / The Cointelegraph ​ 19 Views

The Bank for International Settlement’s Project Tourbillon features two eCash prototypes, the first providing “unconditional payer anonymity” and the second being “more resilient” in security terms.

The Bank for International Settlements (BIS) Innovation Hub has presented the final report on its private central bank digital currency (CBDC) initiative, Project Tourbillon. The prototypes built in the project’s framework could allow payment anonymity for CBDC transactions.

The 46-page report, published on Nov. 29, explores the concepts 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 that with the complete anonymity of the consumer during the transaction with the merchant, the report says:

“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.

Related: The ‘godfather of crypto’ wants to create a privacy-focused CBDC. Here’s how

However, in the first stage, all users must undergo a Know Your Customer procedure at a commercial bank to use the CBDC. As in the current financial system, the merchant’s bank remains responsible for ensuring that transactions comply with regulatory requirements such as Anti-Money Laundering, Countering the Financing of Terrorism and tax evasion laws.

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 protocols and account relationships between customers, merchants, banks and central banks.

The BIS spearheads global CBDC adoption, assisting the Swiss National Bank in wholesale CBDC development and collaborating on joint platforms with central banks in China, Hong Kong, Thailand and the United Arab Emirates, among others. It is also working on a transaction tracker proof-of-concept with the European Central Bank.

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