Project Tourbillon demonstrates cash-like anonymity for retail CBDC

Project Tourbillon, developed by the Bank for International Settlements (BIS) Innovation Hub Swiss Centre, demonstrates a new privacy paradigm for retail central bank digital currencies (CBDC). The experiment proposes a concept of payer anonymity, providing cash-like anonymity to the payer. Privacy is a foundational requirement for retail CBDCs, consistently ranking at or near the top of users' concerns, according to recent surveys conducted by the Bank of England and the European Central Bank. Payment arrangements used today have different levels of privacy: Cash provides full anonymity for both payer and payee but cannot be used in online transactions. Credit and debit cards are confidential for the user, provided that only banks and card operators see personal information. Users have to trust that they keep it secure. Cryptocurrencies generally provide pseudo-anonymity where amounts and addresses are visible on the public blockchain, making the exposure of identities possible. Project Tourbillon tested the concept of payer anonymity, which provides cash-like anonymity to payers, although not for payees. For example, a consumer paying a merchant using CBDCs does not disclose personal information to anyone, including the merchant, banks and the central bank. However, the identity of the merchant is disclosed to the merchant's bank (as part of the payment) and is kept confidential there. This concept also helps to reduce tax evasion or illicit payments. The central bank is able to see the transaction amount but remains unaware of any details regarding the consumer or the merchant.