Sweden's central bank, Riksbank, has unveiled its final report on the digital krona pilot project, shedding light on the end-user experience, particularly focusing on offline functionalities. Published on March 20, this fourth and conclusive report delves into a distinct offline retail transaction model compared to the one proposed in the pilot's second phase. In this alternative model, transaction data is stored on the user's mobile phone.
In contemplating the digital krona's implementation, Riksbank is exploring the utilization of "shadow wallets" and payment cards, also known as stored value cards, within the online system's framework. Both components are envisioned to play integral roles in the system's architecture, with the card serving as a payment instrument capable of monitoring offline changes in account balances. The report evaluates four specific use cases, encompassing funding and withdrawal of payment instruments, offline point-of-sale transactions via near-field communication, transfers between two cards in offline settings, and the imposition of limits on card balances and transaction volumes.
While mobile phones facilitate communication between cards and between cards and point-of-sale terminals, their security in the transaction process remains a concern. The report highlights that ensuring secure user-to-user payments entails numerous steps, potentially compromising user-friendliness due to complexity. Additionally, the synchronization of payment cards poses challenges, with some shadow wallets risking liquidity loss if synchronization sequences are improperly executed after successive transactions. Measures such as counters are proposed to ensure correct synchronization and safeguard against replay attacks.
To manage offline transactions effectively, the payment cards will be programmed with predefined limits on transaction size and frequency. As these restrictions may evolve over time, necessitating adjustments, the issuance of new cards becomes necessary to accommodate updated parameters. The security of instructions exchanged between payment cards and intermediaries, facilitated by R3's Corda platform, relies on digital certificates. While these certificates are self-signed, the establishment of a trusted and verified infrastructure is deemed essential before the system can be operationalized. Since initiating work on the e-krona in 2020, Riksbank remains committed to ongoing research on a central bank digital currency, contingent on potential legislative introduction of the e-krona.
