Allgemein

Project Icebreaker Concludes: BIS Explores Benefits of CBDC for International Payments

• The Bank for International Settlements (BIS) has concluded its exploration of a project related to international payments using central bank digital currencies (CBDC).
• This project, known as „Project Icebreaker,“ focused on understanding the benefits of both banks and retail customers through the use of CBDC.
• BIS used a hub-and-spoke method to connect the central banks of Israel, Norway, and Sweden with their respective national CBDC systems.

Overview

The Bank for International Settlements (BIS) has wrapped up its exploration of a project related to international payments using Central Bank Digital Currencies (CBDC). Project Icebreaker was conducted with the aim of understanding the potential benefits of both banks and retail customers through the use of CBDC. BIS used a hub-and-spoke method to connect the three participating countries – Israel, Norway, and Sweden – and their respective national CBDC systems.

Project Icebreaker

Project Icebreaker was conducted by BIS along with the Central Banks of Israel, Norway, and Sweden in order to explore different international retail and remittance payment use cases for central bank digital currencies (CBDC). The goal was to understand the benefits that could potentially be gained by both banks and retail customers through the use of CBDC. A hub-and-spoke model was adopted in order to connect each country’s respective national CBDC system in one cohesive network. This would allow end users access to more competitive exchange rates while still allowing central banks full control over their own currency.

Benefits For Retail Customers

The report from BIS‘ Innovation Hub Nordic Centre highlighted several potential benefits that could be gained by retail customers when using a hub-and-spoke model for connecting domestic CBDC networks across multiple countries. Without this approach, individual rCBDC systems would need specific network configurations in order to communicate with each other, leading to complex integrations which could introduce cyber security risks. With a hub-and-spoke model however, these risks are minimized while offering end users better access to competitive exchange rates from multiple providers at once.

Other Initiatives

In October 2020, BIS announced success in another pilot involving four different countries: Hong Kong, Thailand, China, and UAE. The results from Project Icebreaker could potentially pave way for Israel, Norway, or Sweden to launch their own digital shekel/krone/krona respectively. As such it is clear that BIS sees value in developing more widespread adoption of CBDCs across various countries around the world.

Conclusion

The research conducted by BIS via Project Icebreaker into connecting domestic CBDC networks across multiple countries has revealed many potential advantages for not only financial institutions but also regular consumers who might benefit from wider access competitive exchange rates when conducting transactions abroad or making remittances overseas. As such it is likely that we will continue seeing further initiatives from BIS towards wider adoption of CBDCS going forward