Brazil’s central bank, Banco do Brasil, is examining offline functions related to its digital currency, DREX, ahead of its release.
In this regard, the central bank will enlist the assistance of Giesecke+Devrient (G+D), a major participant in security technology, in the capacity of the pilot’s technical director.
For market share, DREX will contend with Pix, a widely recognized immediate payments platform in Brazil. More than 150 million users are present. However, experts believe that DREX has a distinct advantage over its competitors due to its numerous proposed features, such as offline and cross-border payment.
Marisa Reghini, vice president of Banco do Brasil, asserts that inactive payment systems will offer technological advancements and convenience to users who presently lack access to both. Brazilian citizens will be granted the opportunity to securely complete their daily tasks and make payments without needing a bank account.
Users who do not possess a bank account will have the capability to establish connections with the CBDC; however, no technical details were disclosed. This aspect underscores the significance of non-bank wallet providers; however, the feasibility of commercial banks implementing the offline system is still uncertain.
Raoul Herborg, managing director of G+D, stated that in order for CBDC to be classified as a public digital currency, it must be universally applicable.
G+D has amassed considerable experience with offline CBDCs through their participation as a technical associate in Hong Kong’s CBDC testing. These companies, in addition to a number of prominent commercial banks, payment service providers, merchants, and individual consumers, participated in Ghana’s retail CBDC pilot program.
While at present, no central bank has integrated offline functionalities into its CBDCs, numerous experimental initiatives have achieved remarkable success, thereby establishing a solid foundation for a comprehensive implementation. An investigation was undertaken by the Australia and New Zealand Banking Group that utilized preloaded cards and near-field communication (NFC) to execute offline CBDC transactions under controlled conditions.
India, China, and Canada have all joined the effort to test offline CBDCs during periodic and continuing internet disruptions. For central banks, the absence of an internationally recognized standard concerning offline CBDC continues to be a matter of doubt.