Riksbank's e-Krona Pilot Report Reveals Mixed Results and Future Considerations
Summary:
Sweden's central bank, the Riksbank, has unveiled the final report on the pilot project for its digital currency, the e-krona, highlighting mixed results from user experiences and offline functionality. The bank is now contemplating the use of a "shadow wallet" and a payment card, instead of relying solely on mobile phones for offline transactions. The report also explored security issues, synchronization of payment cards, and the implementation of restrictions on the card's transaction volume and number. Despite hurdles, further research into the Central Bank Digital Currency (CBDC) will be carried out by Riksbank.
Sweden's central bank, the Riksbank, has published the final report on its pilot project for a digital krona, highlighting the results and user experiences, with a particular emphasis on offline usability. The findings were a mixed bag.
This latest and final report, released on 20th March, delved into a new approach for offline retail transactions, differing from the one proposed in the second phase of the project, which relied on mobile phones to document offline transactions.
Under new contemplation is a "shadow wallet," a component of the online system, alongside a stored-value card, or payment card. These elements were initially included in the system's design. Payments and adjustments to offline account balances would be channeled via the card.
The report explored four scenarios: loading and unloading values onto the payment instrument, facilitating offline payments at a sale point using Near Field Communications, exchanges between two cards offline, and regulating limits on card balance and transaction counts. Mobile phones facilitated communication between cards and between a card and a sale point. However, the use of mobile phones raised security concerns with respect to transaction chains.
The report stated, “The process for secure user-to-user payments is complex and unfriendly for users... Chances of simplifying the process are slim with this design.” Additionally, synchronizing payment cards poses another challenge, with shadow wallets likely to become illiquid if transactions are not sequenced correctly. Counters to ensure proper order of payment synchronization and prevent the repetition of e-krona by the same user multiple times were also suggested.
The proposed card would have built-in restrictions, defining the volume and number of offline transactions. As such, any change in limits necessitates the issuance of new cards.
The flow of instructions between payment cards and the intermediary platform, R3’s Corda, were secured using digital certificates. While the certificates were self-signed, a trusted and verified infrastructure would be required before the system could be fully operational.
Riksbank commenced exploration into a digital cronan in 2020, and has committed to ongoing CBDC research, pending future legislative approval for a digital currency.
Published At
3/20/2024 10:08:17 PM
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