The authors describe a hypothetical payments system in which citizens are provided with a monthly allotment of ‘anonymity vouchers’. The vouchers expire and cannot be traded. If users wish to make an anonymous payment, they must attach a voucher to each payment request. By doing so neither the issuing central bank nor the anti-money laundering authorities will be privy to the payor’s identity. Once the allotment is used up, payments can no longer anonymous.
By rationing anonymity, the authors of the paper hope to allow for lower-value anonymous payments while filtering out larger ones. Presumably large payments are more likely to be used for nefarious purposes. In the ECB’s words, this hypothetical system strikes a balance between “an individual’s right to privacy with the public’s interest in the enforcement of anti-money laundering and the financing of terrorism regulations.”