The BIS Innovation Hub’s Final Report on Private CBDC Initiative
The Bank for International Settlements (BIS) Innovation Hub has released its final report on Project Tourbillon, its private central bank digital currency (CBDC) initiative. The report explores the concepts of privacy, security, and scalability through two prototypes named eCash 1.0 and eCash 2.0. These prototypes, based on the designs of cryptography pioneer David Chaum, offer payment anonymity for CBDC transactions.
Anonymity and Security Features of the Prototypes
eCash 1.0 provides unconditional payer anonymity, while eCash 2.0 has more resilient security features. The report states that it is possible to implement a CBDC that ensures payer anonymity while combating illicit transactions. In this system, a consumer paying with CBDCs remains anonymous to all parties involved, including the merchant, banks, and the central bank.
Merchant Identity and Central Bank Monitoring
In this scheme, the identity of the merchant is only known to the payer and disclosed to the merchant’s bank during the payment process. The central bank does not have access to personal payment data but can monitor CBDC circulation at an aggregate level.
Integration with Existing Payment Landscape
While users must undergo a Know Your Customer procedure at a commercial bank to use the CBDC initially, Tourbillon’s payment process can be easily integrated into today’s payment landscape. It utilizes existing technologies such as QR codes, proof-of-stake protocols, and account relationships between customers, merchants, banks, and central banks.
The BIS’s Role in CBDC Adoption
The BIS is leading global efforts in CBDC adoption. It is 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. The BIS is also working on a transaction tracker proof-of-concept with the European Central Bank.
Hot Take: BIS Innovation Hub Presents Private CBDC Initiative Report
The Bank for International Settlements (BIS) Innovation Hub has published its final report on Project Tourbillon, an initiative focused on private central bank digital currencies (CBDCs). The report highlights the potential for payment anonymity in CBDC transactions and explores the security features of two prototypes named eCash 1.0 and eCash 2.0. The prototypes aim to provide unconditional payer anonymity and enhanced security, respectively. According to the report, it is feasible to implement a CBDC that ensures anonymity while combating illicit transactions. The BIS continues to drive CBDC adoption globally by collaborating with various central banks and developing innovative solutions for the future of digital currencies.
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