Sweden’s Riksbank Addressing Risks for Offline E-Krona Payments

In its latest report, Sweden’s Riksbank emphasized the need for technical and regulatory advancements to ensure secure offline payments with e-kronas. The central bank highlighted the risks associated with unsynchronized data in offline transactions, underscoring the importance of aligning offline balances with online accounts to mitigate liquidity risks.

The potential risks arise from shadow wallets and intermediary nodes that connect offline and online wallets, leading to discrepancies in balances when multiple users engage in consecutive offline transactions. For example, if individuals add CBDCs to their offline wallets and spend them without proper synchronization, recipients may face reduced funds due to the misalignment of offline and online balances.

To address these challenges, Sweden’s central bank is exploring solutions like creating liquidity pools for payments or restricting offline CBDC usage until synchronization occurs. However, the feasibility of these solutions is still under evaluation by the Riksbank following the completion of the e-krona pilot.

No definitive decisions have been made regarding the issuance of a digital currency or the choice of technology, emphasizing the ongoing research and development efforts by Sweden’s Riksbank in the realm of CBDCs.