The Bank for International Settlements (BIS) has published the results of the second phase of Project Aurum, arguing that user privacy in a central bank digital currency should rely on more than the central bank's pledge not to look.

What the Aurum prototype actually does

A central bank digital currency is digital money issued directly by a country's central bank, rather than a claim on a commercial bank. According to the BIS report, Project Aurum Phase 2 is an early-stage test built on the earlier Aurum code. The BIS Innovation Hub, which operates technology research centres for central banks around the world, developed it together with the Hong Kong Monetary Authority and other institutions. The prototype combines several privacy tools, including encryption and zero-knowledge proofs — a cryptographic technique also used in some cryptocurrencies — which allow a payment to be verified without revealing the names tied to the transaction or the amount involved.

Under the design, an arrangement commonly described as a two-tier or intermediated model, people would still sign up through their regular banks. Those banks would verify customers' identities and keep their records, without the central bank having access to any of that information. Personal details would be handed over only when the law demands it.

This marks a notable shift in tone from 2020, when BIS General Manager Agustín Carstens said a central bank digital currency (CBDC) would give the issuer "absolute control on the rules and regulations" governing its use. Carstens made the remark on an International Monetary Fund (IMF) panel, and conspiracy theorists later seized on it.

Why privacy should be enforced

The findings arrive amid an ongoing privacy debate over central bank digital currencies. In August 2026, European Central Bank (ECB) board member Piero Cipollone said the planned digital euro would deliver the maximum level of privacy of any current technology, insisting that the Eurosystem could not structurally link people to their transactions. In the ECB's earlier online consultation on a digital euro, privacy was the most frequently mentioned topic among respondents.

Civil society groups, including the Austrian digital rights organization Epicenter.works, wrote a joint statement warning that legislative promises regarding the digital euro can be reinterpreted or broken. A research paper by Jeff Nijsse and Andrea Pinto, which examined 20 CBDC projects, found that privacy features promised in early proposals are usually watered down by launch.

Project Aurum, however, has yet to be released or used commercially. The BIS report also acknowledges trade-offs: stronger privacy can make transactions slower, programmable features such as conditional payments harder to build, and lost wallets difficult to recover.