The Bank for International Settlements (BIS) has released a guide that explores the possibility of using central bank digital currencies (CBDCs) for payments when and where there is no internet connection. Titled 'Project Polaris', the handbook focuses on various methods of implementing CBDCs and the roles of the actors involved in the payments ecosystem. It follows the joint project completed between the BIS, the central banks of Sweden, Norway, and Israel.
The manual looks at ways to create a payment system that has resilience, supports inclusion and accessibility, and protects the privacy of its users. It stresses the importance of taking a risk-based approach from the start of the design phase and incorporating tamper-proof hardware and software, as well as exploring existing technologies for a user-friendly experience. It also emphasizes the need for collaboration between the public and private sectors.
The cryptocurrency community, meanwhile, has criticized CBDCs for being a tool for governments and central banks to impose financial control and spy on citizens. However, the Bank of America (NYSE: BAC) believes CBDCs could revolutionize financial systems and be the most significant technological advancement in the history of money. The European Central Bank (ECB) President has similarly admitted that a digital euro would be used in a limited way to control individual payments. The International Monetary Fund (IMF) has also released their own handbook to help countries explore the introduction of CBDCs.
Overall, there are a lot of factors to consider when implementing a CBDC system. To create a payment system that is secure and reliable requires careful planning, individual evaluation of each situation, and collaboration between the public and private sectors. It’s clear that the governments and central banks have recognized the potential of digital assets, and are exploring the practicalities of how the technology can be put to use when there is no internet connection. The results of this work may ultimately play a vital role in the future of digital currencies.
Yana Long
- 2023-05-11
Exploring How to Use CBDCs for Payments Without an Internet Connection
The Bank for International Settlements (BIS) has released the Project Polaris handbook to explore the possibility of using central bank digital currencies (CBDCs) for payments when there is no internet connection. The manual outlines ways to create a secure, reliable payment system and stresses the importance of collaboration, risk-based approaches and user-friendly technology.
