BIS Innovation Hub Unveils Project Tourbillon's Findings on Private CBDCs and Transaction Anonymity
Summary:
The Innovation Hub at the Bank for International Settlements (BIS) has released its final report on Project Tourbillon, exploring the concept of a 'private CBDC'. The project has resulted in prototypes that maintain anonymity in CBDC transactions. The report suggests it's possible to implement a CBDC providing payer anonymity while preventing illicit transactions. This is ensured using existing technologies such as QR codes and PoS protocols. The BIS is backing global CBDC adoption, aiding the Swiss National Bank with wholesale CBDC development and partnering with central banks worldwide.
The Innovation Hub at the Bank for International Settlements (BIS) has published the definitive report on Project Tourbillon, set to explore the concept of a 'private CBDC'. This initiative has resulted in prototypes capable of maintaining anonymity in transactions with central bank digital currencies. Unveiled on November 29, this 46-page report delves into matters of privacy, scalability and security, examining two prototypes founded on the work of cryptography specialist, David Chaum. Known as eCash 1.0 and eCash 2.0, the former supports complete payer anonymity while the latter boasts robust security features.
The authors of this report articulated that a central bank digital currency or CBDC which upholds payer anonymity, yet aids in curbing illicit transactions, is viable. This goal is achieved in Project Tourbillon via complete consumer anonymity during merchant transactions. It was highlighted that with the use of CBDCs, all involved parties, which include the merchant and banks, remain unaware of the consumer's identity. Within this setup, only the payer knows the identity of the merchant, and it is shared solely with the merchant's bank as part of the transaction. The central bank, meanwhile, remains oblivious to individual payment information, having access only to aggregated CBDC circulation data.
However, before making use of the CBDC, all users must clear a Know Your Customer (KYC) procedure at a commercial bank in the initial phase. The merchant's bank holds the ongoing responsibility, mirroring existing financial systems, to ensure transactions are in alignment with regulations such as those for anti-money laundering (AML), countering the financing of terrorism (CFT) and fighting tax evasion.
Observations from the report indicated that integrating Tourbillon's transaction process into present payment systems would be straightforward. The process utilizes currently existing technologies such as QR codes, proof-of-stake (PoS) protocols, and the account relationships shared by customers, merchants, banks and central banks. The BIS plays a leading role in the global acceptance of CBDCs, offering assistance to the Swiss National Bank in the development of a wholesale CBDC and collaborating with the UAE, Hong Kong, Thailand, and China's central banks on shared platforms. Furthermore, a proof-of-concept transaction tracker is in the works, undertaken in partnership with the European Central Bank amongst other projects.
Published At
11/29/2023 11:59:55 AM
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