What the e-krona Teaches Us About Money That Works Offline

A payment system that assumes the internet will be there

Think about the last time you paid for something. Maybe you tapped a card, maybe you scanned a code on your phone. In either case, something invisible happened in the background: a message travelled from the shop's terminal to a payment company, then to your bank, then back again. All of that took perhaps two seconds, and you never noticed. Now imagine all of it switched off. No mobile data, no wi-fi, no landline. A power cut, a storm, a cyber attack, or simply a very bad day for the telecoms network.

That scenario is the reason central banks have been spending so much time on a deceptively simple question. Can money live on a device, in your pocket, and still work when nothing else does? Sweden's Riksbank has been exploring this since 2017 through its project for the e-krona, a digital version of the Swedish krona issued by the central bank itself. A central bank digital currency, or CBDC, is simply state-issued money in digital form, the electronic cousin of a banknote. The Riksbank's technical pilot ran until 2023, and its final phase dug into offline payments. The lessons reach well beyond Sweden.

Why offline matters more than it sounds

Most of us treat connectivity like oxygen: essential, but only noticeable when it's gone. The Riksbank's premise is that an e-krona should serve as an additional payment option that contributes to robustness and preparedness. In plain terms, if card systems or bank systems go down, people still need to buy food, medicine and fuel.

Sweden has already taken a related step in the real world. From 1 July 2026, expanded options allow card payments offline for up to seven days during disruptions in data communication, under an agreement between the Riksbank and market participants. You insert your physical card, enter your PIN, and the chip authorises the purchase on its own up to a certain amount. Transactions are stored in the terminal and sent onward once the connection returns.

That last detail is worth pausing on. The shop gets paid later, and your bank deducts the money later. The payment felt instant to you, but the settlement, meaning the actual movement of funds between institutions, waited. Hold that thought; it's the heart of this whole story.

Two ways to take money offline

The Riksbank tested two quite different approaches across its pilot phases, and the contrast is genuinely useful for anyone trying to understand how digital money design works.

In phase 2, the solution was token-based. Tokens are digital units of value that can be moved around, and in that design copies of the e-krona were placed onto a payment instrument such as a mobile phone. The value physically travelled with you, like carrying cash.

Phase 4 took another route. Here the solution was balance-based, using a payment card. The technical setup reserves e-krona for offline use in a so-called shadow wallet held in the online system. The card records the shadow wallet's balance and the offline transactions that follow. Crucially, the actual e-kronor issued by the Riksbank never leave the online system. They only change hands when the payment instruments are synchronised, meaning the card reconnects and reconciles with the central system.

In the project, the Riksbank tested transfers to and from payment cards, offline payments to merchants, offline transfers between end-users, and a synchronisation mechanism to make sure every offline payment landed correctly in the online system. Its headline conclusion was refreshingly honest: a secure and functional offline solution requires a lot of development work on technology, regulations and processes.

The trade-offs nobody can wave away

Offline digital money runs into a problem cash solves with paper and physics. How do you stop someone spending the same digital funds twice when there is no live ledger to check against? This is called double spending, and it gets harder the moment you disconnect.

Work by the Bank of England on a digital pound, which explored offline payments with several technology partners, illustrates the difficulty. All the solutions tested could achieve final and irrevocable payments from a technology perspective by storing funds locally on a smartphone or smart card. But that required users to download funds in advance. In an unexpected outage, if you hadn't prepared, the offline function wouldn't help you until someone paid you offline. Solutions also displayed a separate offline balance alongside the online one, so users had to choose which pot to spend from. Not insurmountable, but a small chore in the middle of a checkout queue.

Security relied heavily on secure elements, which are microprocessor chips with enhanced protections, already embedded in most modern smartphones. If those were breached, double spending and counterfeiting would become possible. Online reconciliation, where records are checked once devices reconnect, could detect problems, but only after the fact. By then, as the Bank of England put it, users would have already suffered losses. Limits on offline amounts and transaction counts helped, though they could block payments unexpectedly, and stronger security tended to require more expensive devices, which has financial inclusion implications.

The wider map: pilots everywhere, decisions nowhere yet

Sweden is not alone in this sandbox. A 2023 survey by the Bank for International Settlements found that 94% of surveyed central banks were exploring a CBDC, proceeding at their own speed and considering different design features. For retail CBDCs, more than half were weighing holding limits, interoperability, offline options and zero remuneration. The BIS Innovation Hub's Project Polaris, a guide on offline payments, noted that such solutions are still evolving and very few are production-ready or working at scale in a live environment, though a number of mature pilots exist.

It also flagged an unavoidable tension: a high level of privacy could affect how suspicious activity is detected and countered. There is no one-size-fits-all answer, because each central bank has unique requirements.

Meanwhile, the wholesale side of the picture is moving on a separate track. Wholesale CBDC refers to settlement between banks in central bank money. As ECB Executive Board member Fabio Panetta pointed out, this has existed for decades; the debate is about modernising it, not inventing it. A Federal Reserve analysis made a similar point from a different angle, arguing that a new settlement asset in the form of wholesale CBDC is not essential for tokenised platforms, since existing reserves can serve as the settlement asset.

What this means for the plumbing

Settlement infrastructure is the unglamorous machinery beneath every payment. Offline designs change where the risk sits. In a normal card payment, checks happen in real time; in an offline one, the reckoning comes later. That shifts responsibility onto device security, limits, and reconciliation processes, and raises legal questions about when a payment is truly final.

There is also the small matter of a lost phone. The Bank of England explicitly noted that what happens to offline funds if a user loses their device was a technical challenge not addressed in its project. Anyone who has ever lost a wallet will feel that one in the ribs.

Where things actually stand

No decision has been made on whether to issue an e-krona. Sweden's 2023 inquiry into the role of the state in the payment market assessed that there was insufficient social need at the time, while noting global changes could alter that view. The Riksbank's focus is now on following international work, particularly the digital euro, and it has proposed a inquiry into necessary legislative amendments so an e-krona could be introduced within a reasonable time if parliament decides to allow it. The Bank of England similarly stresses that its experiments do not indicate a decision to build a digital pound.

Jurisdiction matters enormously here. Legal finality, liability, privacy rules and consumer protection differ by country, and none of this is settled. What is clear is that offline capability is a priority for many central banks, and that getting it right is less about clever technology than about choosing which trade-offs a society can live with.

The next time a card payment takes two seconds, spare a thought for the years of design work trying to make those two seconds survive a blackout. Money, it turns out, is easy. Money that keeps working when everything else stops is the hard part.