Sweden, Israel and Norway Engage BIS to Explore Cross-border CBDC Payments

UTC by Mercy Tukiya Mutanya · 3 min read
Sweden, Israel and Norway Engage BIS to Explore Cross-border CBDC Payments
Photo: Depositphotos

This news comes after an announcement by the BIS revealing that a CBDC pilot involving the central banks of Hong Kong, Thailand, China, and the United Arab Emirates had been successful.

Central banks from Norway, Sweden, and Israel have partnered with the Bank for International Settlements (BIS) to look into the feasibility of international retail and remittance payments use cases for central bank digital currencies (CBDCs).

According to a Wednesday announcement by the BIS, the pact – Project Icebreaker – will involve testing key functions and the technological viability of interlinking CBDC systems. The project is an attempt to reduce the cost and time while improving the transparency with which cross-border payments are made. The testing will be done by the bank’s Innovation Hub Nordic Center. The banks, in partnership with BIS Nordic Centre, will create a new “hub” in which they can connect and test out their proof-of-concept CBDC systems. CBDC architecture and related policy concerns are will be explored in the experiment. A report on the project is expected to be released in the first quarter of 2023.

“Efficient and accessible cross-border payments are of extreme 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. The results of the project will be very important in guiding our future work on the digital shekel,” Bank of Israel deputy governor Andrew Abir said.

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

“We are delighted to be part of one of the first experimental test of cross border retail CBDC together with our partners BIS Innovation Hub, Sveriges Riksbank, and Bank of Israel. This will add significant value to our experimental test of domestic retail CBDC payments,” commented Torbjørn Hægeland, Norges Bank’s Executive Director for Financial Stability.

This news comes after a September 27 announcement by the BIS revealing that a CBDC pilot involving the central banks of Hong Kong, Thailand, China, and the United Arab Emirates had been successful. The test lasted for a month and involved cross-border transactions of $22 million.

Other nations have been exploring the use of CDBCs to improve cross-border remittances. Central banks in Australia, Singapore, South Africa, and Malaysia announced such initiatives in September of last year. Meanwhile, China has been making strides in its digital yuan trial, expanding it to more regions this month. In the US, legislators and financial regulators are exploring the different approaches to a CDBC following a March executive order by president Joe Biden calling on government departments and agencies to explore the benefits and risks of a digital dollar.

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Mercy Tukiya Mutanya

Mercy Mutanya is a Tech enthusiast, Digital Marketer, Writer and IT Business Management Student. She enjoys reading, writing, doing crosswords and binge-watching her favourite TV series.

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