The Bank for International Settlements (BIS) has announced the launch of a new prototype central bank digital currency (CBDC).

The project is aimed at identifying how to improve the cyber resiliency, scalability and privacy of CBDCs. BIS said that while central banks have identified these as core features of CBDCs, designing them involves “complex trade-offs” between the three elements.

Higher resiliency against cyber-attacks, particularly from quantum computers, requires additional cryptography, which can lead to slower payment processing.

At the same time, privacy needs to be balanced with protection against money laundering and other illegal activity.

The prototype is aimed at reconciling these trade-offs by bringing together technologies like blind signatures and mix networks with research on cryptography and CBDC design.

The move follows several pilots by the bank, which earlier this month partnered with the central banks of France, Singapore and Switzerland to test cross-border CBDC trading and settlement using DeFi protocols.

A week before the trial, BIS revealed that it had completed a pilot for the use of CBDCs by commercial banks for real-value transactions.

“Digital central bank money can make payments better and more inclusive,” said Morten Bech, head of the BIS Innovation Hub Swiss Centre. “Yet delivering a CBDC involves difficult trade-offs between cyber resilience, scalability and user privacy.”

Bech continued: “Project Tourbillon will build and test a prototype that reconciles these trade-offs and pushes central banks' technological frontier.”

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