Project Aurum Phase 2: Privacy-Enhancing Technologies for Digital Cash (BIS)
The Bank for International Settlements (BIS) published an update on Phase 2 of its Project Aurum that explores how privacy-enhancing technologies (PETs) can mitigate the tension between user privacy and regulatory compliance in digital cash. Built on the existing Aurum codebase, the prototype applies privacy-by-design principles to strike a balance between complete anonymity and full transparency. By embedding privacy directly into technical architecture rather than relying strictly on institutional safeguards, the system minimizes data exposure while maintaining compliance and operational integrity. Furthermore, customizable parameters enable central banks and the BIS to calibrate functionalities according to distinct policy objectives, risk appetites, and broader applications for PETs. [BIS]
Cross-Border DVP in the Age of Tokenization: Interoperability for Carbon Credit Transactions (HKMA)
The Hong Kong Monetary Authority (HKMA) published a report that presented the outcomes of a year-long proof-of-concept (POC) with the Bank of Thailand and Hong Kong Exchanges and Clearing Limited, that explored how tokenized deposits (TDs) and central bank digital currencies (CBDCs) coordinated through two central bank platforms could enable seamless cross-border delivery-versus-payment (DVP) for carbon credit transactions. Conducted under Project Ensemble and Project San, the trial evaluated whether distributed ledger infrastructures can synchronize bilateral asset settlement while mitigating principal risk. The findings indicate that programmable wholesale CBDCs and commercial TDs can execute atomic DVP settlement across distinct jurisdictions. However, substantive questions remain regarding cross-chain interoperability standards, secondary market liquidity for tokenized environmental assets, and the enforceability of harmonized regulatory frameworks. Further policy analysis is required to determine whether such decentralized market architectures provide demonstrable efficiency gains over optimized, conventional real-time gross settlement systems. [HKMA]
BTW if you want to see a complete database of my DFC-related posts going back years, including many that didn’t make the Daily Digest cut, click here.
FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
