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ECB looks at privacy in central bank digital currency

ECB has published a paper looking at what is the right balance between privacy in electronic payments and compliance with AML requirements. The paper explores how a central bank digital currency payment system based on DLT could work. ECB’s “proof of concept” looks at how it is possible to construct a simplified system that would allow some degree of privacy for low-value transactions, while ensuring mandatory AML/CFT checks are carried out on higher-value transactions. ECB says there is no urgent need to implement this system, but that its proof of concept will be instrumental in any future assessment of how CBDC could work in practice.

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Emma Radmore