Project Aurum Phase Two Focuses on Privacy for Retail CBDCs

Project Aurum Phase Two Focuses on Privacy for Retail CBDCs

by March 21, 2024

The BIS Innovation Hub Hong Kong Centre, in collaboration with the Hong Kong Monetary Authority (HKMA), has initiated the second phase of Project Aurum. This phase aims to explore and enhance privacy measures for retail central bank digital currencies (CBDCs).

Following the successful completion of its first phase, which developed a comprehensive CBDC system featuring both a wholesale interbank system and a retail e-wallet, Project Aurum’s next stage will delve into privacy enhancements. This decision comes in response to public consultations that have underscored privacy as a critical factor for the adoption of CBDCs by consumers.

Project Aurum 2.0 will concentrate on “privacy by design” principles and assess various privacy-enhancing technologies, such as pseudonymisation and zero-knowledge proof. The project intends to investigate how these technologies can be integrated into CBDC systems without compromising system performance or regulatory compliance.

A collaborative effort with universities and privacy experts is planned to bolster the project’s multidisciplinary approach to solving privacy concerns in digital currency systems. The objective is to provide central banks with practical insights on balancing privacy with transparency in the design of their CBDC systems.

Additionally, the HKMA and the BIS Innovation Hub are preparing a technical paper in partnership with the CBDC Expert Group and privacy specialists. This document aims to establish a foundational understanding of privacy-enhancing technologies within the CBDC ecosystem.

Featured image credit: Edited from Freepik