The Bank for International Settlements, or BIS, has reported that it has completed a project exploring international retail payments and remittance use cases for central bank digital currencies, or CBDCs, with the central banks of Israel, Norway and Sweden.
In a report published on March 6, The BIS notes that Project Icebreaker, an initiative involving the bank’s Nordic Innovation Center to test the key functions and technological feasibility of interconnecting national CBDC systems via the Central Bank of Norway, the Bank of Israel, has concluded. and the Sveriges Riksbank. According to the report, the BIS concluded that a “hub-and-spoke” model between national systems could “reduce settlement and counterparty risk by using coordinated payments in central bank money and completing cross-border transactions in a matter of seconds.”
Without a “hub-and-spoke” approach, each system [CBDC minorista, o rCBDC] would need to make individual specific network and infrastructure configurations to communicate with other rCBDC systems”the report said. “The communication between these rCBDC systems may not be standardized through a common interface and would instead be a bespoke integration between each pair of rCBDC systems. This would not only be complex to support and maintain, but could also introduce cybersecurity risks.
The #BISInnovationHub Nordic Center and the central banks of Israel, Norway and Sweden have concluded Project Icebreaker, which studied the potential benefits and challenges of using retail #CBDC in international payments @riksbanken @NorgesBank https://t.co/2OfFYaPbr6 pic.twitter.com/jPFjrCXDlT
— Bank for International Settlements (@BIS_org) March 6, 2023
The Nordic #BISInnovationHub and the central banks of Israel, Norway and Sweden have concluded Project Icebreaker, which studied the potential benefits and challenges of using retail #CBDCs in international payments.
The report could lay the groundwork for a cross-border payments system should the central banks of Israel, Norway and Sweden go ahead with issuing a digital shekel, a digital krone and a digital krona, respectively. In October 2022, the bank reported that a CBDC pilot involving the central banks of Hong Kong, Thailand, China, and the United Arab Emirates had been “successful” after a month-long trial that facilitated cross-border transactions for value of 22 million dollars.
In 2020, the Central Bank of the Bahamas became the first in the world to make a central bank-issued CBDC called the Sand Dollar available to all residents of the island nation. Other countries have been moving forward on large-scale trials of digital currencies, including China — the nation’s central bank reportedly distributed millions of digital yuan over the Lunar New Year holidays.
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