How to issue a privacy-preserving central bank digital currency

Many central banks are currently investigating Central Bank Digital Currency (CBDC) and possible designs. A recent survey conducted by the European Central Bank has found that both citizens and professionals consider privacy the most important feature of a CBDC. We show how a central bank could issue a CBDC that would be easily scalable and allow the preservation of a key feature of physical cash: transaction privacy. At the same time the proposed design would meet regulatory requirements and thus offer an appropriate balance between privacy and legal compliance.