BIS Innovation Hub’s Project Tourbillon Reveals Retail CBDC’s Cash-Like Anonymity

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The Bank for International Settlements (BIS) Innovation Hub Swiss Centre has introduced Project Tourbillon, showcasing a novel privacy approach for retail central bank digital currencies (CBDC). Addressing concerns raised in surveys by the Bank of England and the European Central Bank, the project focuses on payer anonymity, offering cash-like privacy to the payer in CBDC transactions.

Currently, various payment methods offer different levels of privacy: Cash provides full anonymity for both payer and payee but is not suitable for online transactions. Credit and debit cards are confidential for users but require trust in banks and card operators to secure personal information. Cryptocurrencies offer pseudo-anonymity but may expose identities through public blockchains.

Project Tourbillon’s payer anonymity concept ensures that consumers making CBDC transactions do not disclose personal information to merchants, banks, or central banks. However, the merchant’s identity is shared with the merchant’s bank, maintaining confidentiality. This approach helps address concerns related to tax evasion and illicit payments.

Thomas Moser from the Swiss National Bank emphasized the technological challenge of ensuring privacy protection while preventing abuse. Morten Bech, head of BIS Innovation Hub Swiss Centre, highlighted the importance of balancing privacy with security and scalability in retail CBDCs.

The project developed two prototypes, eCash 1.0 (EC1) and eCash 2.0 (EC2), based on the eCash design. EC1 resembles a cash-like digital payment instrument, while EC2 explores enhanced security features for counterfeit protection. Considering future threats from quantum computers, Tourbillon also examined quantum-safe blind signatures for privacy and security. The findings suggest that implementing quantum-safe cryptography is possible but requires specialized expertise, impacting transaction processing speed.

Project Tourbillon serves as an initial exploration of privacy, security, and scalability trade-offs in retail CBDC design. The BIS Innovation Hub emphasizes the need for further research, particularly in improving quantum-safe cryptography, extending use cases, and exploring viability for future developments.