BIS Tackles Complexities of Offline CBDC Implementation in New Handbook

By enabling offline use for CBDCs, a central bank could hope to achieve various public policy objectives including those closely aligned with its core mandate, the guide reads


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The Bank for International Settlements Innovation Hub has published a comprehensive handbook, specifically designed to assist central banks in the implementation of offline central bank digital currency, or CBDC, technology.

“Providing offline payments with CBDC is an important requirement for many central banks, but its implementation is complex,” BIS said in its guide, published this month.

That’s because the implementation involves a “number of technology, security and operational considerations” necessary for the development at the earliest stages, it said.

The guide suggests that by allowing offline use of CBDCs, a central bank could potentially achieve various public policy objectives that align closely with its core mandate.

BIS says the feature of leveraging a centrally-issued digital currency for offline use was deemed vital or advantageous by 98% of the supposed banks surveyed. 

Specifically, the handbook attempts to advise central banks on security measures, risks, privacy considerations, and resilience options associated with offline transactions of CBDCs.

It is thought an offline digital dollar or euro would help further a central bank’s objectives, including financial inclusion, payment system resiliency, economic stability and monetary policy efficiency.

According to the BIS, privacy is considered a key requirement for CBDC payments. The primary privacy concerns generally revolve around striking a balance, the handbook notes. 

On one hand, there’s the necessity to uphold privacy, often likened to the level of anonymity offered by cash transactions. 

On the other hand, there’s the imperative to counteract financial crimes such as money laundering, tax evasion, and funding of terrorist activities. 

Anti-CBDC proponents argue that this specific justification, which emphasizes the monitoring of transactions, poses a threat to the privacy rights of individuals.

While the US government continues to explore their use, per a presidential mandate, a concrete timeline for their issuance remains elusive.

That hasn’t stopped the issue from boiling over to a point. Last month, Presidential candidate Robert Kennedy Jr decried their use, warning of potential government overreach. 

Florida Governor Ron DeSantis echoed similar sentiments, saying that if the Federal Reserve issued a CBDC, it could grant the government excessive oversight of individual finances. 

He additionally suggested that their use could potentially restrict citizens from making purchases like firearms, or limit their gas consumption.

While the claims from both high-profile figures aim to curry favor from privacy-minded voters, the actual impact of a centrally-issued digital currency on a nation’s economy remains to be seen.

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