Central bank digital currencies (CBDCs) have been fully launched only in the Bahamas, Jamaica and Nigeria. CBDCs are in development, research and testing in 131 countries. Pilot tests are in various stages in another 36 countries.

CBDCs are identical twins of banknotes. As such, they need to be available to consumers 100% of the time. This means they must be able to function offline when an online connection to a financial ledger approved by a central bank can’t be attained.

Idemia Secure Transactions (IST), a division of Idemia Group, best known in card payments as the second largest manufacturer worldwide of EMV-compliant credit and debit cards, has been developing its wallet technology over the last four years to address requirements for offline CBDC transactions, which include the prevention of double spending and unauthorized money creation.

Offline CBDC payments are likely to gain acceptance and begin deployments later this decade when, concurrently, all payment systems used in the banking and financial services industries must be prepared to counter the threat from the processing power of quantum computers arriving in the market.

Idemia’s CBDC wallet, which can exist in a mobile phone or a smart card, addresses offline payments and quantum security. It uses proprietary software to facilitate balance management, user authentication, central bank policy implementations and cryptographic key storage.

The wallet’s security protection incorporates hybrid cryptography, meaning that the cryptographic algorithms used to protect transactions today will be retained and combined with new quantum-resistant algorithms.

Secure elements in cards and phones—like those used for EMV-compliant transactions—or SIM cards in phones will store the quantum-resistant keys. Idemia introduced its first 5G quantum-safe chips for mobile phones in 2020 and has continued to invest. It uses similar chips in the national identity cards and passports it manufactures.

Testing of offline CBDC transactions in real-world conditions, including the enhanced level of security they require, must address the need to use quantum-resistant crypto algorithms fast enough to support transactions at the point of sale. Payment transactions need to occur immediately.

Idemia Secure Transactions and chip manufacturer Qualcomm are partners. Software for IST’s CBDC wallet can be placed on the secure processing unit of Qualcomm’s Snapdragon 8-Series mobile platform for Android devices.

Among the opportunities associated with CBDCs is the ability to provide digital financial inclusion to more than 1.5 billion people worldwide who currently don’t have bank accounts.