Canada Experiments with a New Digital Dollar Model

Key Points

1. The Bank of Canada is testing a retail CBDC framework based on the OpenCBDC 2PC model, developed with MIT's Digital Currency Initiative.

2. The design prioritizes privacy using cryptographic techniques like zero-knowledge proofs and a UTXO model to prevent government surveillance.

3. Technical challenges include scalability issues and potential performance drops during high transaction volumes.

4. The Bank of Canada clarifies that this research does not indicate immediate implementation but presents a viable model for future consideration.

5. The initiative aims to balance user privacy, operational flexibility, and institutional supervision in a digital currency system.