Sweden’s central bank, Riksbank, has released its final report after conducting tests of the digital krona (e-krona) pilot through the aspect of offline payment functionalities. The submitted report offers another variant: a phone operating in an offline mode and having a memory card that stores all transactional data.
This new approach has been designed to have embedded “shadow wallets,” which are present within the system’s online environment, along with a physical payment card. The card functioned as the payment instrument, and it allowed the debit card balance to be updated offline. Researchers tested four scenarios:
When dealing with fiat currency, there is a huge array of costs: loading/unloading funds onto the card (offline), payments using an actual point-of-sale (POS) terminal using Near Field Communication (NFC), card-to-card transfers (offline), and setting transaction or balance limits.
The mobile phones made it possible for the card and the POS terminal to communicate. However, security concerns arose. The report points out that, “User-to-user payments involve many copies to be made secure, and they undermine the user-friendliness of the user interface.” Synchronizing payment cards with the replicated transactions was one of the drawbacks.
The Swedish Central Bank is delving deeper into counters to maintain proper order and prevent possible persistent token replay attacks.
In the trial run, the ProgramLimitCards feature of the cards was also tested to see whether the restrictions on offline transactions, such as the size limit and the number, would work. They would need to reissue cards whenever circumstances change so that the lockdown does not escape attention.
Digital certificates allow different cards to communicate in a trusted manner through an intermediary platform. Whereas self-signed certificates were merely used for testing, the issuance of a trusted infrastructure is a prerequisite for practical utilization.
As early as 2020, Sweden started inquiring about the digital version of the krona. Riksbank continues collaboration in Central Bank Digital Currency (CBDC) research and development as the latter-day law is around the corner.
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