A proposal from Switzerland for the digital euro

Emerging and established digital currencies, such as Bitcoin, mean central banks face a major decision: should they provide alternatives to physical cash themselves in future or leave the issuing of digital currencies to private sector providers?

A recently published scientific paper by Dr Christian Grothoff, a professor of computer science at Bern University of Applied Sciences, Dr David Chaum, an American cryptography expert, and Dr Thomas Moser, Alternate Member of the Governing Board at the Swiss National Bank, looks at the topic of central bank digital currencies. The authors do not explore the issue of whether or not digital currency should be issued by a state institution. ‘Our paper outlines how a national or supranational central bank should approach implementing this step technically,’ explains Dr Christian Grothoff.

In their scientific publication, the authors propose a token-based system using GNU Taler without distributed-ledger technology. They outline how electronic currency should be implemented to protect the privacy of transactions for citizens, while also meeting regulatory requirements. The authors also show that their proposal for a central bank digital currency does not have any negative effects on the monetary policy of the issuing central bank.