SWEDEN

The central banks of Israel, Norway and Sweden are working with the BIS to explore CBDC payments

The Bank for International Settlements, or BIS, has reported that it will work with the central banks of Israel, Norway and Sweden to explore use cases for international retail and remittance payments for central bank digital currencies, or CBDCs.

In an announcement on September 28, BIS said the collaboration – called Project Icebreaker – will involve the bank’s Innovation Hub Nordic Center testing key features and the technical feasibility of interconnecting domestic CBDC systems. The central banks will develop a new hub where Norway’s central bank, Israel’s Bank and Sweden’s Riksbank can connect their proof-of-concept CBDC systems.

Beju Shah, the head of the Innovation Hub Nordic Centre, said the experiment will explore CBDC design and architecture, as well as related policy issues. The project aimed to improve cross-border payments using 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 and this was identified as one of the main motivations for a potential issuance of a digital shekel,” said Bank of Israel Deputy Governor Andrew Abir. “The results of the project will be very important in guiding our future work on the digital shekel.”

The BIS reported on September 27 that a CBDC pilot involving the central banks of Hong Kong, Thailand, China and the United Arab Emirates was “successful” after a month-long test that facilitated $22 million worth of cross-border transactions. Other countries’ central banks have launched similar initiatives related to improving cross-border settlements, as institutions in Australia, Singapore, Malaysia and South Africa announced in September 2021.

Related: Australian pilot CBDC for eAUD to start mid-2023: RBA White Paper

Norway’s central bank, Israel’s Bank and Sweden’s Riksbank have all considered the merits of rolling out their respective CBDCs, while China reportedly expanded trials of its digital yuan to larger parts of the country in September. In the US, lawmakers and regulators have taken different approaches to exploring the digital dollar, while an executive order in March from President Joe Biden prompted government departments and agencies to examine the benefits and risks of a CBDC.