The Riksbank, Sweden’s central bank, has published its final report on the digital krona pilot project, focusing on the experience of end-users and offline functionality. The results were a mix of positive and negative outcomes.
On March 20, the Riksbank released its fourth and final report on the e-krona. This report explored an alternative model for offline retail transactions, deviating from the one proposed in Phase 2 of the pilot. In the previous model, transaction information was stored on mobile phones.
The Riksbank is now considering the implementation of a “shadow wallet” in the online system, along with a payment card (stored-value card). Both of these components were already included in the system design. The payment card would serve as the payment instrument and keep track of offline changes to account balances.
The report examined four use cases: funding and defunding the payment instrument, offline payment at a point of sale (POS) using near-field communication, offline transfers between two cards, and imposing limitations on balance and transaction numbers on a card.
Mobile phones were utilized for communication between cards and between a card and a POS. However, due to security concerns, mobile phones were not considered secure components in the transaction process. This poses a challenge for the Riksbank’s central bank digital currency (CBDC).
Another issue faced by the Riksbank is the synchronization of payment cards. If the order of synchronization is incorrect after a series of transactions, some shadow wallets may become illiquid. To address this, counters would ensure that offline payments are synchronized in the correct order and prevent replay attacks, where the same e-krona is used multiple times by the same party.
To set restrictions on the size and number of offline transactions, limitations would be programmed into the card. As a result, new cards would need to be issued whenever restrictions change.
To guarantee the security of instructions exchanged between payment cards and the intermediary (R3’s Corda platform), digital certificates were employed. While these certificates were self-signed, the establishment of trusted and verified infrastructure would be necessary before the system could be launched.
Sweden initiated research on the e-krona in 2020, and the Riksbank has committed to continue CBDC research in the event that legislation is passed to introduce it.
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