Under the coordination of the ECB, the European System of Central Banks (ESCB) has established a proof of concept for anonymity in digital cash, aka central bank digital currency (CBDC), which demonstrates that it is possible to construct a simplified CBDC payment system that allows users some degree of privacy for lower-value transactions, while still ensuring that higher-value transactions are subject to mandatory AML/CFT checks.
The PoC boasts several novel features developed by the ESCB’s EUROchain research network (with the support of Accenture and R3) using distributed ledger technology (DLT). It provides a digitalization solution for AML/CFT compliance procedures whereby a user’s identity and transaction history cannot be seen by the central bank or intermediaries other than that chosen by the user.
The enforcement of limits on anonymous electronic transactions is automated, and additional checks are delegated to an AML authority. This is achieved using “anonymity vouchers”, which allow users to anonymously transfer a limited amount of CBDC over a defined period of time.
That proof of concept is part of the ESCB’s ongoing technical research on CBDC and the aim is to contribute to the broader discussion on the topic. The work carried out is not geared towards practical implementation and does not imply any decision to proceed with CBDC. The ECB will continue to analyze CBDC with a view to exploring the benefits of new technologies for European citizens and in order to be ready to act should the need arise in future.