The Bank for International Settlements Innovation Hub (BIS) has published a comprehensive handbook specifically designed to assist central banks in the implementation of offline Central Bank Digital Currency (CBDC) technology. Although providing offline payments with CBDC is considered an important requirement for many central banks, its implementation is complex and involves numerous technology, security, and operational considerations.
The guide suggests that by enabling offline use for CBDCs, a central bank could achieve various public policy objectives closely aligned with its core mandate. In a survey, 98% of banks considered the feature of leveraging a centrally-issued digital currency for offline use as vital or advantageous. The handbook aims to advise central banks on security measures, risks, privacy considerations, and resilience options associated with offline transactions of CBDCs.
An offline digital dollar or euro could help further the central banks’ 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 involve striking a balance between upholding privacy, similar to the level of anonymity offered by cash transactions, and counteracting financial crimes like money laundering, tax evasion, and funding of terrorist activities.
Anti-CBDC proponents argue that the monitoring of transactions, which is emphasized in the justification, poses a threat to the privacy rights of individuals. The US government continues exploring this technology per a presidential mandate, but a concrete timeline for its issuance has remained elusive.
Presidential candidate Robert Kennedy Jr and Florida Governor Ron DeSantis both expressed concerns about the potential for government overreach with CBDCs. They warned that this technology could grant the government excessive oversight of individual finances, restrict citizens from making certain purchases like firearms, or limit their gas consumption.
While high-profile figures aim to gather support from privacy-minded voters, the actual impact of a centrally-issued digital currency on a nation’s economy remains to be seen. As CBDCs continue to be a topic of interest and debate, future advancements and discussions will further shape this digital financial landscape.
Source: Blockworks
