ECB’s Report On Its CBDC Development
In December 2017, the ECB released a new report, with the title “Exploring anonymity in central bank digital currencies.” This report provides detailed information about the way CBDC could function. The CBDC research has a motive for contributing to the broader discussion of central bank chains.
The CBDC concept utilizes many features established by R3 and Accenture, and the network gets referred to as Eurochain. The Eurochain report’s content includes the hypothetical network’s benefits and the discussion on how anonymity can fit into the logistics.
Some Content of the ECB’s Report
The report stated that the ECB’s intending approach to enforcing AML/CTF limits the amount that a CBDC user can spend without involving AML authorities.
The report also pointed out that the economy’s ongoing digitization represents a significant challenge for the payment ecosystem, requiring a balance between allowing a certain degree of privacy in electronic payments and ensuring compliance with regulations to tackle money laundering and financing terrorism (AML/CFT regulations).
CBDC’s Adoption Strategies Bringing Mixed Emotions
A tweet by a critic indicated that the Eurochain CBDC is UTXO bitcoin’s model-based. John Paul commented on Twitter, saying that ECB is the central issuer of the CBDC units. The units live on the Eurochain, which follows the Bitcoin UTXO model.
John Paul also argued that the chain could not have anonymity; at best, it can only match Bitcoin’s pseudo-anonymity. He also said that users can’t generate their wallets but need to apply to intermediaries for a new account. He also added that Eurochain could control wallet access and CBDC volume.
There have been discussions since 2015 on CBDC, and their creation, such as the Petro, developed by Venezuela’s president. However, some countries are not interested in the CBDC trend and are giving warnings against them. As per the central bank of South Korea, countries that adopt a CBDC could experience liquidity shortages and increase interest rates. However, a study by the Korea bank noted that approximately 70% of central banks worldwide are researching CBDCs.