---
title: "BIS Unveils Project Aurum Phase 2 Testing Privacy Technologies for Digital Cash"
description: "The central banking hub built a prototype balancing user privacy and regulatory compliance using privacy-enhancing technologies."
url: https://basisdesk.news/news/bis-project-aurum-phase-2-digital-cash-privacy
published: 2026-10-13T13:41:18.939Z
modified: 2026-10-13T13:41:18.939Z
section: Regulation & Policy
author: Basis Desk Newsroom (AI-generated, source-verified)
sentiment: neutral
tickers: []
tags: [bis, cbdc, privacy, central-banks, digital-cash]
license: Quote with attribution to Basis Desk (basisdesk.news). Not financial advice.
---

# BIS Unveils Project Aurum Phase 2 Testing Privacy Technologies for Digital Cash

The central banking hub built a prototype balancing user privacy and regulatory compliance using privacy-enhancing technologies.

## At a glance

- **What happened:** The Bank for International Settlements released Project Aurum Phase 2, demonstrating a digital cash prototype that uses privacy-enhancing technologies to balance user privacy and compliance.
- **Why it matters:** The model shows central banks can mathematically embed privacy controls directly into digital payment code instead of relying purely on administrative or institutional policies.
- **Who is affected:** Central banks, monetary policy authorities, and digital currency payment system designers.
- **What's next:** Central banks are expected to evaluate PET studies across broader financial use cases based on lessons outlined by the BIS.
- **Status:** announced
- **Primary source:** [Project Aurum Phase 2: exploring privacy-enhancing technologies for digital cash | Bank for International Settlements](https://www.bis.org/publications/project-aurum-phase-2-exploring-privacy-enhancing-technologies-digital-cash) — bis.org

## Key points

- BIS released Project Aurum Phase 2 exploring privacy-enhancing technologies for retail digital cash architecture.
- The prototype establishes a middle ground between complete financial anonymity and full transaction surveillance.
- Central banks can calibrate the software's compliance and privacy parameters to match specific jurisdictions.

## Editorial remark

- **Context:** Retail central bank digital currency initiatives have faced intense public pushback over transaction surveillance, prompting international bodies to explore technical cryptographic privacy solutions.
- **Impact:** Central banks evaluating sovereign digital payments receive a technical framework to limit personal data exposure while retaining regulatory enforcement capabilities.
- **Watch:** Follow-up research from the BIS Innovation Hub Hong Kong Centre on expanding privacy-enhancing technologies across other settlement and payment use cases.

The Bank for International Settlements (BIS) published findings from Project Aurum Phase 2 on Oct. 13, detailing a new prototype that explores how privacy-enhancing technologies (PETs) can resolve tensions between consumer confidentiality and compliance obligations in retail digital cash [1].

Built upon the initial Aurum codebase, the second phase demonstrates that privacy can be directly embedded into software architecture rather than depending entirely on institutional rules [1]. The system employs privacy-by-design and privacy-by-default concepts to navigate between the extremes of total transaction anonymity and complete transparency [1]. According to the BIS, the prototype integrates adjustable operational features, allowing central banks to tune monitoring, compliance, and privacy settings according to specific legal mandates and risk tolerances [1].

## Balancing Surveillance and Anonymity

The central bank umbrella organization noted that the technical model reduces excess exposure of identity and transfer data while preserving broader system integrity [1]. Project Aurum Phase 2 aims to give monetary authorities a framework to examine trade-offs inherent to sovereign digital currencies [1]. The BIS indicated that central banks could expand studies of privacy-preserving techniques to other financial applications and outlined operational lessons learned for future implementations [1].

## FAQ

**What is Project Aurum Phase 2?**

It is a central banking research initiative by the BIS exploring how privacy-enhancing technologies can be incorporated into digital cash to balance data protection with financial compliance.

**Does Project Aurum offer complete anonymity?**

No. The prototype creates a configurable framework between full anonymity and complete transparency, allowing policymakers to adjust compliance and privacy thresholds.

## Sources

1. [Project Aurum Phase 2: exploring privacy-enhancing technologies for digital cash | Bank for International Settlements](https://www.bis.org/publications/project-aurum-phase-2-exploring-privacy-enhancing-technologies-digital-cash) — bis.org, 2026-10-13

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Basis Desk Newsroom · AI-generated, source-verified · https://basisdesk.news/about/how-we-use-ai