On December 17, the European Central Bank, the European Union’s central bank that issues the euro, reported the progress of a demonstration experiment towards the digitization of the euro. In this experiment, the bank adopted “EUROChain” (Euro Chain), which uses R3’s blockchain technology Corda. He said that the experiment focused on protecting user privacy and anti-money laundering and terrorist financing (AML / CFT) has achieved certain results.
The European Central Bank is promoting the digitization of the euro as a digital currency (CBDC) issued by an EU-recognized central bank. This experiment is the first stage before the commercial version of the prototype is started. Only the above-mentioned privacy protection and AML / CFT are considered, and scalability and interoperability with existing systems are not considered.
The Eurochain used in the demonstration experiment is a research blockchain network that R3 and Accenture cooperate in development under the leadership of the European Central Bank. For small transactions, while protecting the privacy of users, additional AML / CFT checks through specialized agencies can be automatically performed for large transactions.
Usually, observing the state of the blockchain can analyze the history of CBDC related to transactions, so there is a concern about privacy. The euro chain has a function to hide the CBDC history data so that it cannot be seen by the user by means of chain snipping. On the other hand, all data is visible from the central bank side, and it is possible to protect both privacy and AML / CFT.
Our latest research shows that it is possible to build a simplified payment system for central bank digital currencies. Such a system would safeguard users ’privacy for low-value transactions while ensuring that higher-value transfers are subject to anti-money laundering checks.
— European Central Bank (@ecb)December 17, 2019