Central Banks of Israel, Norway, and Sweden Launch Project Icebreaker With BIS

The central banks across the world are gradually making their foray into exploring the adoption of the Central Bank Digital Currency (CBDC).

While many countries are still mulling the idea of a CBDC, others have reached their pilot phase and beta testing phases. According to the International Monetary Fund (IMF), central banks’ CBDC research is going mainstream.

On September 28th, an international financial institution, The Bank for International Settlements (BIS) announced its planned collaboration with the central banks of Israel, Norway, and Sweden to launch a CBDC project. 

The project which is tagged Project Icebreaker is a collective effort to explore the use cases of CBDC for international settlements.

Project Icebreaker is a retail CBDC cross-border project which will run through the year. The final report is expected by Q1 of 2023. Beju Shah, Head of the BIS Innovation Hub Nordic Centre affirmed,

“This first-of-a-kind experiment will dig deeper into the technology, architecture, and design choices and trade-offs, and explore related policy questions. These learnings will be invaluable for central banks thinking about implementing CBDCs for cross-border payments.”

CBDC Mitigate Cross-Border Payment Insufficiencies

Taking the edges off cross-border payments in terms of high costs, low speed, limited access, and insufficient transparency is one reason for the development of a CBDC.

Accordingly, BIS affirmed the participation of its Innovative Hub Nordic Centre in collaboration with the three central banks to develop a hub where there will be a connection between their digital fiat systems’ proof-of-concept.

As stated by BIS, the intention of the hub is “test some specific key functions and the technological feasibility of interlinking different domestic CBDC systems.” Eventually, retail cross-border payment at a significantly low cost in relation to traditional systems will be enabled.

Meanwhile, the Bank of Ghana says its CBDC (E-Cedi) is focused on financial inclusion for its economy. 

“I think in terms of CBDC, our goal is to be able to finish testing it. We’ve seen the results. We’re going to look at the study each and every time in the future. But our real reason for doing it is more financial inclusion, “ Kwame Oppong, the head of fintech and innovation at the Bank of Ghana.