The Bank of Canada has initiated a pilot project exploring a digital dollar built on the OpenCBDC 2PC platform. This effort is part of broader research into how central bank digital currencies (CBDCs) can balance user privacy with financial regulations.
Launch of Digital Dollar Pilot
The Bank of Canada has launched a pilot project focused on the possibility of creating a digital dollar using the OpenCBDC 2PC platform. The pilot aims to explore how CBDCs can integrate user privacy, financial regulations, and peer-to-peer capabilities while protecting against financial crime.
Privacy and Compliance Requirements
Achieving a balance between user privacy and regulatory compliance is a core challenge for central banks globally. The pilot project employs a two-party computation (2PC) model that allows sensitive data to be encrypted and distributed across network nodes. This prevents any single party from accessing complete transaction details. Law enforcement can track illicit activity only under tightly controlled conditions, helping to meet anti-money laundering (AML) and counter-terrorism financing (CTF) requirements.
Decentralization via P2P Transactions
Unlike traditional CBDC models that rely on centralized intermediaries, OpenCBDC 2PC promotes decentralized peer-to-peer digital cash. Users can transact directly without intermediaries, reducing friction and maintaining transaction availability even if a central server fails. This model also aligns with global efforts to modernize payment infrastructure using blockchain-inspired technology while keeping central banks in a mediating role.
The current phase of the pilot focuses on technical demonstrations, assessing system performance, public reaction, and potential risks before considering broader rollout.