Zero-Knowledge Proof (ZKP) Authentication for Offline CBDC Payment System Using IoT Devices

A Central Bank Digital Currency (CBDC) is central-bank money in digital form, held by the public. Leading designs have two limitations: conversion from bank deposits into CBDC can accelerate deposit flight, requiring safeguards, and the CBDC stays outside credit creation and monetary-policy operations. Here we present a CBDC architecture based on grassroots currencies that overcomes these limitations. The architecture has three components: (1) Money: sovereign grassroots coins, which are digital debts of one unit of fiat currency issued by the central bank, constituting a direct CBDC; (2) Credit and Liquidity: non-sovereign grassroots coins, which are digital debts of one unit of the same fiat currency, redeemable at par, that can be issued by any person, natural or legal, thus adding credit; and (3) Interest: grassroots bonds, sovereign and non-sovereign, adding maturity and thus interest, standard banking instruments, and the central bank's instruments of monetary policy. The central bank can therefore lend, absorb liquidity, set its rates and buy and sell securities in the coins and bonds the public holds, choosing the counterparties and terms of its credit operations, and without converting bank deposits into newly issued central bank money on demand. We prove that the arbitrage-free price of any non-sovereign grassroots coin whose issuer redeems it on demand is one unit of the fiat currency. The central bank can choose to deal with any counterparty, not just banks, and we argue that the central bank's interest rates on lending and bonds bound from above and below the corresponding interest rates of its counterparties. Sovereign and non-sovereign grassroots coins and bonds have been implemented and tested on a small scale.

AI agents are beginning to make real payments. Current approaches let an agent pay by relying on a credential provider that, in the approaches deployed today, typically sits outside the cardholder's bank. The spending rules are then enforced by the card network or that provider, and not by the bank itself. This leaves the issuing bank, which carries the financial risk, with little direct control at the moment a payment happens. This paper describes Issuer-Sovereign Agentic Payments, a method that keeps that control with the issuer. The cardholder approves a spending rule once, and the bank's own authentication component records it. Later, when the agent pays a specific merchant, the bank checks the merchant against the approved rule and generates the card authentication value only if the merchant is allowed. The payment then travels the normal card rails and is validated by the issuer, with no extra dependency introduced at execution.

Recent advances in error-corrected qubits have accelerated the timeline for practical quantum computing. It poses a threat to cryptographic primitives used to secure financial systems, government infrastructure, communication networks, and DeFi (Decentralized Finance) ecosystems. This paper introduces a post-quantum secure federated DeFi framework that enables inter-bank collaboration to improve the inclusivity of individuals underserved by local lenders due to limited financial histories. Multiple banks contribute encrypted information batches to a virtual server, where lattice-based Fully Homomorphic Encryption (FHE) enables end-to-end homomorphic computation. The server fuses local data-driven probabilistic assessments, expert beliefs, and verifiable evidence generated by the NASA-IBM Prithvi Geospatial Foundation Model (GFM), in encrypted format. Decentralized technologies are employed to ensure tamper-proof evidence and auditable accountability for all encrypted data exchanges between institutions and the server. The framework is tested on agricultural lending decisions for rural borrowers in Virginia.