BIS partners with Israel, Norway and Sweden for CBDC payments after completing $22m pilot
- The Bank for International Settlements (BIS) launched Project Icebreaker to explore cross-border CBDC payments with Israel, Norway and Sweden.
- The project will result in the creation of a “hub” that will connect the central banks’ CBDC systems in these countries.
- Earlier this week, BIS announced the successful completion of its pilot run with $22 million worth of transactions.
The increasing adoption of cryptocurrencies is countered only by central bank digital currencies (CBDCs), which some countries consider an alternative to crypto, albeit one they can control.
Although the concept may not hold the principles of crypto, it is still being considered by many governments, resulting in rapid development worldwide.
CBDC transfer to become easy
The BIS announced that it would launch Project Icebreaker together with the central banks of Israel, Norway and Sweden. This will be a joint exploration between the four entities to find out the best way to implement CBDC for international retail and remittance payments.
BIS Innovation Hub Nordic Center will develop a “hub” to reduce the time and costs of cross-border payments. This hub will be connected to the domestic CBDC systems of the Bank of Israel, Norway’s central bank and Sweden’s Riksbank.
The project’s goal will be to test certain functions and technical feasibility to link different CBDC systems.
Project Icebreaker architecture
To explain the process, BIS reported,
“The architecture is designed to enable instant CBDC payments across borders, at a significantly lower cost than with existing systems, which are usually based on sending payments via several different banks to the final recipient (the so-called correspondent banking system). “
The final report is intended to be tested by early 2023, and the final report is expected to be ready in Q1 of next year.
BIS has already done this in the past
While the project was announced on September 28, BIS had already conducted a large pilot, with the results published a day before the announcement.
With the participation of around 20 central banks, BIS successfully completed the CBDC pilot after months of testing. During this period, cross-border transactions worth over USD 22 million were completed through over 160 transfers and currency exchanges.
The central banks of Hong Kong, China and the United Arab Emirates were among the participating banks. In the future, Israel, Norway and Sweden will also join this list.