Central banks worldwide are advancing their Central Bank Digital Currency (CBDC) projects. An essential component of retail CBDCs is the provision of secure digital wallets for consumers, offering a safe means to acquire, hold, and transact in digital currency.

While various wallet providers may emerge, commercial banks are expected to play a pivotal role, given their anticipated position as primary CBDC distributors. They are set to provide direct integration into the existing financial system, akin to their role with physical cash, supported by operational capabilities, extensive customer bases, and established trust. This observation aligns with countries like China and India, which are conducting CBDC pilots with digital wallet apps offered by leading commercial banks in collaboration with central banks.

Temenos banking platform can facilitate CBDC wallets

Building on previous work demonstrating how banks using the Temenos platform can integrate with CBDC platforms like Hyperledger Besu and R3 Corda, we have conducted a proof-of-concept (PoC) that encompasses various use cases. These include the secure creation of non-custodial wallets from a mobile app built with Temenos Visualiser, transaction signing to fund wallets from integrated deposit accounts, management of offline payments, and synchronization of transactions with the core ledger through the Temenos fulfilment service layer.

Key use cases showcased in the PoC involve the secure generation of new wallets, including the creation of a private key within the Temenos Visualiser app runtime. This key is generated within the phone’s secure enclave, ensuring its protection against external threats. Only non-sensitive data, such as the public key and account identification details, leave the mobile device and are transmitted to the fulfilment service.

Offline payments are a crucial requirement for many central banks, and this PoC explores one of the models outlined in the Bank for International Settlements‘ (BIS) Polaris project handbook for offline payments with CBDC. It successfully demonstrates staged offline payments, where parties synchronize transactions with the core ledger to settle offline-transferred value.

Contactless payments using near field communication (NFC) were implemented in this context, with one mobile device acting as a Host Card Emulation (HCE) device and the other as an NFC reader. This showcased the exchange of cryptographically signed transaction data between mobile phones without the need for an internet connection. Both devices retained offline transaction records locally to ensure the security of available balances and prevent double spending. Transactions were settled by one device synchronizing with the core ledger through the fulfilment service, updating the available balance in the mobile wallet.

This proof-of-concept demonstrates the Temenos banking platform’s capability to support various CBDC wallet features, including offline payments based on a standard BIS model, with potential exploration of other models in the future.

Temenos has illustrated how its platform can facilitate a comprehensive end-to-end vision of retail CBDC, encompassing issuance, distribution, exchange between central banks and commercial banks, and now, consumer digital wallets.

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