The final report on the digital krona pilot project conducted by the Riksbank, Sweden’s central bank, has been released. The report focuses on the experience of end-users and specifically examines offline functionality, with varying outcomes.
On March 20, the Riksbank published its fourth and final report on the e-krona. This report explores a different approach to offline retail transactions compared to the one proposed in Phase 2 of the pilot. In the previous model, offline 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). These elements were already included in the system design. The payment card would serve as the instrument for transactions and keep track of offline changes to account balances.
Four different use cases were examined, including funding and defunding the payment instrument, offline payments at point of sale (POS) using near-field communication, offline transfers between two cards, and the imposition of limitations on the balance and number of transactions on a card.
Mobile phones were utilized for communication between cards and between cards and a POS. However, the Riksbank encountered challenges regarding the security of mobile phones within the transaction process. To address this, counters were implemented to ensure synchronization of offline payments in the correct order and to prevent replay attacks.
The Riksbank also faced the issue of synchronizing payment cards. If synchronization is not performed in the right order after a series of transactions, some shadow wallets could become illiquid. Therefore, careful attention was given to order synchronization to maintain the integrity of the system.
To guarantee the security of instructions between payment cards and the intermediary, the R3 Corda platform, digital certificates were employed. Although these certificates were self-signed, the implementation 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 continuing its research on central bank digital currencies (CBDCs) in the event that legislation is passed to introduce one.
In conclusion, the Riksbank’s final report provides valuable insights into the digital krona pilot project, particularly with regard to offline functionality. The challenges faced and potential solutions identified will inform the future development of Sweden’s CBDC.