Project Tourbillon explores cyber resiliency, scalability and privacy in a prototype CBDC
Tourbillon, a new project launched by the BIS Innovation Hub's Swiss Centre, explores how to improve cyber resiliency, scalability and privacy in a prototype Central Bank Digital Currency (CBDC).
Central banks have identified cyber resiliency, scalability and privacy as core features of CBDCs. However, designing them involves complex trade-offs between these three elements. For example, higher resiliency against cyber-attacks, especially from quantum computers, requires additional cryptography, which can slow down payment processing. Privacy must be weighed against the need to counter money laundering, terrorism financing and other illicit payments.
Project Tourbillon aims to reconcile these trade-offs by combining proven technologies such as blind signatures and mix networks with the latest research on cryptography and CBDC design suggested by researchers David Chaum and Thomas Moser (see eCash 2.0).
Cyber resiliency supports safe and effective digital payments infrastructures. The project achieves this by experimenting with quantum-resistant design and cryptography.
Scalability accommodates the potential for high transaction volumes. Tourbillon achieves this by using an architecture that is compatible with, but not based on, distributed ledger technology. By making each transaction separate, the system resources scale linearly. The project seeks to verify the linear scalability of the design with realistic parameters.
Privacy is an important user requirement but at the same raises issues with regards to countering illicit activities. Tourbillon resolves this by providing privacy for the payment sender but not for the recipient. Regulatory and compliance checks will continue to apply.
The conclusions of this project will be relevant for both wholesale and retail CBDC systems. The goal is to finish the prototype by mid-2023.
Digital central bank money can make payments better and more inclusive. Yet delivering a CBDC involves difficult trade-offs between cyber resilience, scalability and user privacy. Project Tourbillon will build and test a prototype that reconciles these trade-offs and pushes central banks' technological frontier.
Many central banks are researching CBDCs in the context of the digital asset transformation. I am proud to be a co-author with David Chaum on the eCash 2.0 paper, which is serving as the basis for this project.
I am thrilled to see these important advances in technology being tested out so that there is no doubt that privacy, including the more advanced type introduced here, can co-exist with the strongest type of quantum resistance and truly practical performance. This provides a better level of privacy than cash, with additional guarantees that the privacy cannot be taken from the end user.