A collaborative effort between central banks has demonstrated that using national digital currencies for payments can still protect privacy.The Bank for International Settlements’ (BIS) Innovation Hub in Switzerland is investigating payer anonymity with central bank digital currency (CBDC) under Project Tourbillon.The central banks examined payment methods where customers can make purchases without disclosing personal information to any third party, including the retailer, according to a project final report released on Wednesday.To lessen tax avoidance and illegal payments, the merchant’s identity would be given to their bank at the time of payment.
Privacy has become a major public worry as countries all over the world ponder issuing digital versions of their national currency.
“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.
According to the report, Tourbillon is a first step toward investigating privacy, security, and scalability for CBDC architecture.Two scalable prototypes that could manage an increasing volume of transactions were constructed by the project.
The report stated that more research is required to examine offline payments, sustainable business models, and other characteristics.