BIS Says Digital Cash Can Achieve ‘Cash-Like Privacy,’ but Technology Not Yet Production-Ready

Published Oct 13, 2026

The Bank for International Settlements (BIS) has stated that digital cash can successfully achieve what it describes as "cash-like privacy." However, the institution highlighted that the underlying technology is not yet production-ready due to lingering security risks, including the potential threat of bank data breaches exposing personal user information.

While digital cash possesses the theoretical capability to offer privacy properties similar to physical cash, the technology stack requires further refinement before it can be deployed on a global scale. This assessment was published on Tuesday as part of the BIS’s Project Aurum Phase 2 report, which explores various privacy-enhancing technologies for digital currencies.

The latest phase of the project implements a privacy-preserving digital cash prototype utilizing the BIS’s existing Aurum codebase. According to the report, this approach is designed to strike a delicate and necessary balance between complete anonymity, which can facilitate illicit activities, and full transaction transparency, which raises significant civil liberties and data protection concerns.

In analyzing the architecture of the prototype, the BIS found that while compromising a single bank might expose the specific customer data held by that institution, it would not expose customer identities from other counterparties. Furthermore, the report noted that a validator-level compromise alone would not be sufficient to compromise or expose end users, offering a layer of architectural resilience against broader systemic breaches.

The release of the BIS report contributes to the ongoing global discourse surrounding the technical features required to establish a secure and privacy-preserving central bank digital currency (CBDC). For years, critics of CBDCs have raised persistent concerns regarding the potential financial surveillance capabilities inherent in government-backed digital currencies. These worries center on the ability of state-backed entities to monitor, trace, or control citizen spending habits through centralized ledgers.

These theoretical concerns have occasionally manifested in practical proofs of concept. In 2023, Brazil’s central bank published the source code for its official CBDC pilot. Within days of its release, independent developers and privacy advocates analyzed the code and pointed out surveillance and control mechanisms embedded directly within its structure. Specifically, the mechanisms allowed the central bank to freeze or reduce user funds within CBDC wallets under certain conditions, sparking intense public debate over financial autonomy.

Political pushback against central bank digital currencies has also escalated in major global economies. Earlier this year, in January, United States President Donald Trump signed an executive order banning federal agencies from issuing or developing a CBDC, citing significant risks to financial stability, personal privacy, and economic freedom.

The executive action aligned with legislative efforts on Capitol Hill, where lawmakers have continued to scrutinize the development of digital fiat. Republican lawmakers have actively called for a permanent ban on CBDCs, a topic that has featured prominently during recent congressional debates surrounding housing and financial regulation bills.

As central banks around the world continue to research and prototype digital currency frameworks, reports like the latest installment of Project Aurum underscore the difficult engineering trade-offs between regulatory compliance, financial integrity, and the fundamental right to privacy in the digital age.