Knox Networks responds to the European Central Bank’s “Market research on possible technical solutions for a digital euro”

In January 2023, the European Central Bank (ECB) released a market research request regarding technical design choices for the digital euro project. While the digital euro is not in full development, this research will be used to help the ECB investigate what technical design choices the digital euro may eventually have. The comments will be used in the digital euro’s investigation phase final report, expected to be published in Fall 2023.

Knox Networks provided feedback to the ECB, focusing on technical advice for how the digital euro system may operate within their predefined architectural model outlined in the technical annex.

More specifically, Knox described how a potential implementation of the digital euro with a File-Based Digital Asset (FBDA) architecture would work. Knox’s response highlighted how FBDAs would be able to solve many of the problems associated with designing a secure, next generation digital money system.

Particular areas of note where Knox highlighted the benefits of FBDAs included:

• Scalability — Knox highlighted the power of horizontal scaling in a FBDA network, which is particularly important for wholesale and retail transactions across many different ECB countries. The ECB had envisioned 200 million end users of the digital euro service, which would put immense technological constraint on existing private DLT systems.
• Interoperability — Knox outlined how FBDAs would be able to interact with the existing payments networks and standards (such as SWIFT messaging), as well as interact with new services in areas such as digital identity.
• Identity (Privacy) — Knox championed the concept of Self-Sovereign Identity (SSI) using modern cryptography techniques to augment using the digital euro alongside digital identity services in a privacy-preserving manner.
• Programmability — Knox highlighted leveraging APIs to program a layer on top of FBDAs that enable value added financial services and institutional analytics.

Knox Networks provides software that supports file-based digital assets for financial institutions globally so that they can partake in the future of all digital money. The Knox platform enables high-speed transactions and settlements between central banks, commercial banks, and consumers. The system provides rich features that help drive innovation while preserving the existing relationships, roles, and regulatory controls within the banking system. This is especially important as the ECB covers several different regulatory regimes and jurisdictions. Of note: Any institution using Knox Networks technology has the ability to operate the network and software on the terms of their regulatory regime and within their own systems. Additionally, the platform is built to support several payments use cases that can be implemented by different types of banks and financial institutions, not just central banks. Read more in our white paper.

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