The Bank for International Settlements, or BIS, has reported that it will partner with the central banks of Israel, Norway and Sweden to explore the use cases of central bank-issued digital currencies in international retail payments and remittances.
In a September 28 announcement, The BIS said the collaboration – dubbed Project Icebreaker – will involve the bank’s Nordic Innovation Center testing the key functions and technological feasibility of interconnecting national CBDC systems. The central banks will develop a new hub where the Central Bank of Norway, the Bank of Israel and the Sveriges Riksbank will be able to connect their trial CBDC systems.
Beju Shah, director of the Nordic Innovation Hub, said the experiment will explore CBDC designs and architecture, as well as related policy issues. The aim of the project is to improve cross-border payments through the use of CBDC by reducing costs and increasing speed and transparency, with a final report expected in the first quarter of 2023.
“Efficient and accessible cross-border payments are of the utmost importance for a small and open economy like Israel’s and this was identified as one of the main motivations for a potential issuance of a digital shekel,” Bank of Israel Deputy Governor Andrew Abir said. “The results of the project will be very important in guiding our future work on the digital shekel.”
the #BISInnovationHub nordic centre, @riksbanken @NorgesBank and Bank of Israel are launching Project Icebreaker to explore how #CBDCs can be used for international retail and remittance payments using a hub-and-spoke model. Read more: https://t.co/1aRTCtJprM pic.twitter.com/CR1tCdAh1j
— Bank for International Settlements (@BIS_org) September 28, 2022
The BIS reported on September 27 that a CBDC pilot project involving the central banks of Hong Kong, Thailand, China, and the United Arab Emirates was “successful” after a month-long trial that facilitated cross-border transactions by value of USD 22 million. Central banks in other countries have launched similar initiatives related to improving cross-border settlements, as announced in September 2021 by institutions in Australia, Singapore, Malaysia and South Africa.
The Norwegian Central Bank, the Bank of Israel, and the Sveriges Riksbank have all studied the merits of implementing their respective CBDCs, while China reportedly expanded testing of its digital yuan to a larger part of the country in September. In the United States, lawmakers and regulators have taken different approaches to exploring a digital dollar, while an executive order from President Joe Biden in March had government departments and agencies investigate the benefits and risks of CBDCs.
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