When the BIS Innovation Hub unveiled its work plan last week, one initiative with limited details was Project Polaris run out of the Nordic hub. It has two related goals. One is to explore central bank digital currency (CBDC) resilience and security. And the other is to research offline CBDCs. On this point, the BIS is looking for offline solution providers to apply to present their offerings by February 24.
There are several potential motivations for an offline CBDC. Resilience is cited as one driver and the related topic of crisis management. For example, consider the tsunami in Japan in 2011. Imagine if physical cash had been phased out. Would users have been able to use an offline CBDC? There was no surprise when the Bank of Japan chose offline CBDC as one of its first topics to investigate.
Another motivation is financial inclusion. Not everyone has a smart phone, and wifi is not available everywhere, particularly in more rural areas. That’s one of the reasons why the demand for an offline CBDC is likely to vary between countries and regions.
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