European Central Bank's legal digital currency PoC first exposed, small transactions can be anonymous


  1. The European Central Bank uses the Corda platform to develop a proof of concept (PoC) to explore the anonymity of central bank digital currencies;
  2. The system makes use of anonymous vouchers, allowing users to process low-value transactions without revealing their identities;
  3. The European Central Bank report acknowledges that the central bank needs to do more research before implementing the system;

On December 19, the European Central Bank (ECB) in its latest report yesterday outlined the proof of concept of an anonymous central bank digital currency, which attempts to combine privacy with compliance.

It is reported that the PoC was developed by Corda, a distributed ledger technology platform, and is based on a proof of concept based on the technology.

The core of this PoC project is to allow users who make small transactions to use anonymous tickets, so there is no need to disclose their identities, while larger transactions require AML / CFT checks.


Mentioned in the report;

"The proof of concept shows that with the Corda platform, it is possible to build a simplified CBDC payment system that enables low-value transactions to protect user privacy while still ensuring that high-value transactions are subject to mandatory AML / CFT checks."

What are the elements of the European Central Bank's digital currency PoC?

It is reported that this proof of concept (PoC) envisages four institutions: a central bank, two intermediate institutions, and an anti-money laundering (AML) institution, each of which runs a Corda distributed application node. Among them, the central bank does not directly carry users, issue or distribute CBDC units, nor supervise the transfer of CBDC, and the intermediary will maintain the relationship with the users, it will be responsible for processing transactions, and keep records of the books.


(Picture from the European Central Bank)

The key to this system is the use of so-called anonymous tickets.

The report explained that each user uses a pseudonym in the network, and they receive a certain number of anonymous tickets every month. When users process low-value transactions, they can use tickets to avoid revealing their personal information to a central bank or intermediary.

On the other hand, when the user's high-value transactions exceed the anonymous transfer amount allowed by the system, a specialized anti-money laundering agency will monitor transaction data, ensure that the transaction meets current compliance standards, and monitor money laundering and terrorist financing.

What the ECB digital currency needs to improve

The ECB report explores some of the challenges that the proposed system will face as a real-world application.

First, this requires a better transaction verification mechanism to allow more confidentiality. Currently, to verify a transfer transaction, an intermediary needs to check all past transactions associated with that CBDC unit. In order to solve this problem, the European Central Bank proposes to introduce the function of "chain splicing" to reduce the amount of information visible to unrelated parties.

Second, when a designated intermediary is not available, users need to be able to access their balances and initiate transactions.

This improvement can be achieved by allowing users to store their keys in their dedicated devices, such as mobile wallets, or by allowing other intermediate structures in the system to process their CBDC units.

In addition, the European Central Bank also stated that the system needs more privacy-enhancing technologies, interoperability with the real-time full settlement (RTGS) system, and an in-depth analysis of the actual scalability of the PoC.

Uncertain regulatory environment

For a long time, people have been debating whether the European Central Bank should issue its own digital currency so that the public can enjoy a cheap and convenient payment method.

Last week, ECB President Christina Lagarde said at a press conference that the European Central Bank should accelerate its efforts in digital currencies and lead the way in stable currencies or tokens linked to fiat currencies.

But EU authorities also face considerable resistance.

In early December, European Union finance ministers asserted that no global stablecoin should be allowed to issue until legal and regulatory risks have been fully addressed, and former European Central Bank President Trichet also issued his tough stance on digital currencies.