European Central Bank Says Anonymity Possible in Central Banks Digital Currencies

The European Central Bank, headed by Christene Largade, has said it is possible for the Central Banks digital currencies to posses anonymity feature to a certain level.

In a newly published report, the continental bank hinted on the potential of building a simplified payment system for central bank digital currencies which would not only safeguard users’ privacy for low-value transactions but making sure that higher-value transfers are subject to anti-money laundering (AML) checks.

Sighting R3’s Corda as example, ECB says it is possible, making use of Corda platform to build a simplified system that ensures privacy of users, reduces the amount of information visible to parties involved in the deal, however, the impact of the transaction validation mechanism on confidentiality is an issue to be addressed.

Those validating the transaction needs to look at the information on the past CBDC transactions, however, the bank opines that data segregation model of Corda can make it impossible for intermediaries to not have a full overview of all network activities at any given point in time.

The privacy, according to the Central Bank, could be made sophisticated using ideas like the rotating public keys, zero-knowledge proof and enclave computing.

As well, the ECB notes that with the use of rotating keys that ensure users get new pseudonyms every time, the ability to link transactions to individual users is reduced since new pseudonyms are generated over time.

For some time now, the president of the European Central Bank (ECB), Christine Lagarde, has been campaigning in support of stablecoins to get the continents ahead of the curve in the increasingly growing world.

During her speech in Frankfurt, Germany, Lagarde promised to make ECB lead the blockchain revolution.

The former International Monetary Fund boss said stablecoins make transacting look like social media.