BIS issues comprehensive paper on offline CBDC payments
The Bank for International Settlements (BIS) is actively exploring chances for offline payments involving a reserve bank digital currency, or CBDC.On May 11, the BIS Innovation Hub Nordic Centre released an extensive handbook exploring how CBDCs might work for offline payments.The guide is composed in collaboration with technical consultancy Consult Hyperion, addressing goals for durability, money resemblance, availability and other offline CBDC features.Offline payments and journal systems. Source: BISTitled “Project Polaris,” the paper highlights brand-new potential dangers stemming from offline payments with CBDCs, including counterfeit or privacy concerns.According to BIS and Hyperion, offline CBDC payments position privacy threats as they can “both support confidential transactions and be privacy-revealing depending upon style.”Some of the listed privacy concerns include the level of privacy defense offered by the worth transfer procedure. “If the offline value transfer protocol does not support personal privacy by design, then offline payments can never ever be confidential,” the handbook reads.Offline CBDC payment transactions also raise personal privacy or even fraud issues when it concerns recognition and confirmation of counterparty users.In some cases, it may be essential for offline CBDC payees or payers to determine the counterparty, and such transactions might not constantly include face-to-face contact. Central banks would need to take into account such scenarios when developing offline CBDCs, BIS wrote, adding:”The payer might wish to be ensured of the identity of the payee, the details provided to them stand and their payment goes to the right place. […] Impersonation scams is a possible area of risk that reserve banks require to think about with regard to privacy.”The paper also discussed the value of interoperability and risk management systems for offline payments, stressing the requirement for the capability to spot potential breaches of offline bags.”The functions and obligations of the community in supporting offline payments need to be better specified, and partnership in between private and public sectors will be required,” the handbook notes.Related: BIS, Bank of England conclude DLT settlements pilotOffline functionality is a major feature of multiple CBDC jobs presently being established by international reserve banks. As previously reported, nations like Australia, India and Russia have been dealing with offline CBDC payment technology.Australias reserve bank strategies to release a “live pilot” of a CBDC that includes offline payments “in the coming months.” The Reserve Bank of India has been evaluating CBDC offline performance given that March 2023. The main bank of Russia expects to introduce the offline mode for the digital ruble by 2025.
Thank you for reading this post, don't forget to subscribe!
Related Content
- CZ appoints Binance security team to track Huobi HTX stolen funds
- Using courts for every crypto issue will squash innovation — Grayscale CEO
- Bank of Russia reveals digital ruble’s logo and commission fees
- Meta sinks $3.7B in metaverse money pit as CEO eyes Threads user retention
- End The Fed And Opt Out With Bitcoin