The BIS project is a first step in exploring privacy, security and scalability for central bank digital currency design, a report on the initiative said.
A joint project by central banks has shown that it’s possible to maintain privacy when making payments with national digital currencies.
Project Tourbillon, by the Bank for International Settlements’ (BIS) Innovation Hub in Switzerland explores payer anonymity with central bank digital currencies (CBDC). A final report on the project published Wednesday shows the central banks looked at payment options where users don’t need to disclose personal information to anyone, including the merchant. However, the merchant’s identity would be disclosed to their bank when the payment occurs to help reduce tax evasion or illicit payments.
As jurisdictions around the world consider issuing digital versions of sovereign currencies, privacy has emerged as a chief public concern.
“Privacy is an important user requirement but it is the most difficult to solve. The difficulty lies in ensuring privacy protection technologically rather than just promising it, and at the same time ensuring that such a high level of protection cannot be abused,” Thomas Moser, alternate governing board member at the Swiss National Bank said in a press statement.
Tourbillon is a first step in exploring privacy, security and scalability for CBDC design, the report said. The project built two scalable prototypes that could handle a growing number of transactions.
Further work is needed to explore sustainable business models, offline payments and other features, the report said.