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- 1 Offline CBDC payment procedures are made clear by the published handbook by BIS.
- 2 The book addresses issues linked with offline CBDC payments like security, privacy, risk, and solutions.
BIS Offline payment requirements are essential for many central banks. These payments mean without being connected to the internet. This may be due to coverage limitations etc. The reason behind it is privacy and cash resemblance. Though, its execution is tough, and it also includes technology and operational considerations.
Handbook Provides Main Features Of Offline Payments With CBDC
Before publishing the book, The Bank for International Settlements (BIS) has done a survey in which they found that 49% of central banks consider offline payments with retail CBDC as essential, while another 49% consider it advantageous.
The handbook provides a detailed look at the main features of offline payments with CBDC. It is intended to serve as a guide for central banks considering implementing these payment capabilities.
Reason For the Need for Of Handbook
Due to the expansion of the internet and technologies, electronic or online financial systems are becoming popular. Physical cash is losing its dominance. However, electronic financial systems are mostly operated by private entities, and they charge high fees and also have security threats.
For central bank digital currency to be utilized as a national legal ledger. It must be ubiquitous and accessible regardless of time and place, just like physical cash. Therefore online payment functions that extend the accessibility of central bank digital currency are becoming more attractive.
However, due to the characteristics of the electronic financial system, central bank digital currency is vulnerable to possible malicious behavior in offline situations. This book provides methods to improve offline payment solutions based on trusted execution environments.
The research of this 119-page handbook reveals that the solutions for these payments will vary from country to country. It depends on the local requirements. The demographics and background will also influence the solutions chosen.
This book provides the fundamental reasons and usage scenarios for offline payments. It also provides maps and criteria for risk management and privacy. Project Polaris will provide central banks with the essential information needed to inform decision-making, implementation, architecture, design, and operational considerations.
Executing BIS offline payment abilities will need a deeper understanding of the technologies, the threats, and the risks associated, as also the designing part which invades the privacy and ability to bounce back.
Some of the listed privacy concerns show that if the offline value transfer protocol does not support privacy by design, then these payments can never be hidden.
The comprehensive book anticipates a set of considerations that any central bank can use to inform their planning, policy development, technology, and business requirements, procurement activities, and future operations.
Hence, the central bank will understand the technology, security measures, threats, risk management measures, and privacy issues. The book is driven by experts’ advice and the central bank’s surveys. It is compiled in partnership with Consult Hyperion. It can be updated further, considering the cybersecurity, technology, and feedback received.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
