Apr 4, 2025
While the concept of enabling offline payments with a future digital pound is technically within reach, the Bank of England has flagged a series of significant hurdles that would make implementation difficult in practice. This assessment follows new research released by the central bank as part of its ongoing multi-year effort to explore the feasibility of a UK central bank digital currency (CBDC).
As part of its investigation into the offline capabilities of a potential digital pound, the Bank has collaborated with a consortium of technology firms, including Thales, Secretarium, Idemia Secure Transactions, Quali-Sign, and Consult Hyperion. These organisations have been tasked with evaluating the technical and security implications of enabling transactions without real-time access to the central CBDC network.
Offline payments refer to transactions carried out when both the payer and payee are disconnected from the internet or central infrastructure, typically due to network outages or in areas with limited connectivity. This functionality, if realised, could support broader goals such as enhancing system resilience and improving financial inclusion for those with limited digital access.
The Bank’s findings suggest that, although technically achievable, offline digital pound payments introduce serious complications. Chief among these are concerns around the user experience and the difficulty of preventing double-spending and counterfeiting in an environment where transactions are not verified instantly by a central authority.
A key issue lies in the dependence on secure elements, hardware or software modules designed to safeguard transaction data. These secure elements are widely used in the payment ecosystem, but typically function alongside immediate online authentication. In an offline context, however, transactions are reconciled only after they occur. This delay creates a vulnerability window during which undetected fraudulent activity, such as double-spending, could take place, resulting in financial loss before the system has an opportunity to identify or correct the issue.
Despite these concerns, the prototypes tested during the Bank’s research phase demonstrated that it is possible to achieve final and irreversible offline payments. The systems trialled were able to facilitate instant settlement and confirmation of funds transfer, allowing recipients to spend those funds without needing to reconnect to the CBDC network.
Nevertheless, the Bank of England emphasises that the technical findings are only one part of a much broader picture. Even if the technological barriers can be addressed, numerous non-technical factors, such as legal frameworks, commercial models, operational logistics, and policy implications, would need to be fully considered before any decision to implement offline functionality is taken.
As the Bank continues to refine its understanding of what a digital pound could look like, this latest research underscores both the promise and complexity of building a resilient and inclusive digital currency fit for the future.
