Yesterday the European Central Bank
published a paper outlining a proof of concept (PoC) for central bank digital currencies (CBDC). The project aimed to balance the desire for anonymity with anti-money laundering (AML) and counter-terrorism (CFT) requirements.
It involved constructing a simplified payment system which has separate requirements for low-value transactions which can remain anonymous. For these sort of payments, the user can choose which intermediaries, if any, see the transaction details, and it’s not visible to the central bank. Lower-value transactions use “anonymity vouchers”. In contrast, larger sums require AML and CFT procedures which involve proving identity.
In the model, it was assumed that the CBDC was a two-tier currency, issued by the central bank but distributed via intermediaries such as banks or others that might have access to central bank accounts. The PoC also used a dedicated AML authority which rejects transactions to banned users.
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