Token-based CBDC poses security risks – BoC paper

Bank of Canada, Ottawa
Bank of Canada, Ottawa
Photo: Matthew Liteplo Photography

Anonymous, token-based central bank digital currency is likely to expose users to security risks, a paper published by the Bank of Canada finds.

Authors Charles Kahn and Francisco Rivadeneyra note the Bank of Canada has said it would prefer to use the token-based approach if it does issue a CBDC. But they say more work is needed to overcome the technological and security challenges of this approach.

There are trade-offs inherent in the way token-based CBDC balances are aggregated and stored

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