Project Polaris - Invitation to a deep-dive event for offline CBDC solutions

Background

The Bank for International Settlements (BIS) recognises the increasing impact that technology-driven innovation will have on global financial systems and on the way central banks conduct their core public missions. In light of this, the BIS has established an Innovation Hub to serve as a dedicated platform for acquiring expertise and developing technology and digital innovation projects for the benefit of the central banking community. The Nordic Centre of the BIS Innovation Hub (BIS IH) is currently running a project investigating secure and resilient CBDC systems. One critical workstream of this project centres around the provision of offline functionality by CBDC systems.

Objective

• Many central banks considering potential implementation of CBDC deem offline functionality as an important requirement, citing reasons such as resilience, crisis, financial inclusion, cash resemblance, privacy, accessibility as well as others.
• The requirement for and degree to which offline functionality will be provided or utilised will likely vary significantly by country, region, demographics, scenarios as will the solutions that best meet diverse needs.
• The Nordic Centre is now inviting solution providers to participate in a technical deep dive. The findings of the deep dive may help guide central banks in understanding the applicability, suitability and readiness of the variety of solutions available, the risks and trade-offs and the maturity of the solutions.

Why this is important

• The provision of offline functionality could be complex. There are many issues that will need to be addressed, yet there has not been enough discussion about what offline operations for CBDC mean in practise and its implications. This applies across the public and private sector ecosystem.
• This deep dive will enable experts from the BIS IH to gain deeper insights into the range of solutions currently available and to have an open two-way dialogue on a range of topics that could improve central bank knowledge, strategies and investment decisions.
• It could also help central banks, better articulate their expectations and therefore what could be required from the private sector in providing solutions suitable for CBDC, therefore potentially reducing any gaps or resolving assumptions.
• Solution providers chosen to participate will play an important and influential role in this activity.

What information we are seeking to discuss during the deep dive

We are seeking to understand and discuss in depth the following areas:

• The type of solution
• Use cases / applicability
• Limitations
• Risks
• Security
• Scalability
• Maturity / Readiness
• Privacy
• Finality
• Areas of ongoing work
• Gaps and issues
• Guidance / information required from central banks that solution providers need
• Feedback for central banks / areas where they can lend support

Certain selected solution providers will be invited to demonstrate their solutions, present the information that BIS is interested in and engage actively in the resulting discussions. This will be an opportunity to engage with a panel of experts from the BIS (may include appointed consultants for this project), and certain specifically invited observing central banks, in a full day session per provider. (Virtual presentations and discussions may be possible but in person is preferred to allow for a dynamic discussion).

What you will gain and be able to contribute to

• Solution providers have the unique opportunity to help guide the BIS and the central bank community in better understanding offline functionality, the underlying technology, limitations, risks, complexity, opportunities and applicability.
• Solution providers will have the opportunity to seek answers to questions or pose questions that may require further work from the central bank community.

What you need to do in order to apply

BIS IH will select a certain number of solutions that are of interest. Shortlisted applicants will be notified in March at which point you will receive details of the event, including a list of follow-up questions to answer. The result of the decision by BIS IH on which applicants that will be offered the possibility to take part in the deep-dive will be communicated before the end of March.

For your planning purposes, the event is scheduled to take place in the first half of May 2023.

Other points to note

• The aggregate summary of the deep-dive sessions that are held will be presented to the central bank community in a report or similar.
• Participation in this technology deep-dive event is unremunerated and costs incurred by the solution provider will not be reimbursed.
• The deep-dive sessions will be held in Stockholm, Sweden.