Review of Offline Payment Function of CBDC Considering Security Requirements

Abstract

Due to the growth of the internet and communication technologies, electronic financial systems are becoming popular. Physical cash is losing its preeminence, and digital numbers on computers represent money. However, electronic financial systems, mostly operated by private entities, have defects to be compensated for, such as high charges for using the system, security issues, and the problem of exclusion. As a solution, many countries around the world are considering central bank digital currency. For central bank digital currency to be utilized as a national legal tender, it must be universal and accessible regardless of time and place, similar to physical cash. Therefore, offline payment functions that extend the accessibility of central bank digital currency are becoming attractive. However, due to the characteristics of the electronic financial system, central bank digital currency is vulnerable to possible malicious behaviors in offline situations, such as blackouts and system shutdowns. This paper reviews research studies that deal with security matters related to the offline payment function of central bank digital currency. Offline payment solutions, including central bank digital currency and other electronic financial systems, such as electronic cash and cryptocurrency, are reviewed, and supplemental methods to improve the offline payment solutions of central bank digital currency based on trusted execution environment devices are suggested.