The Bank for International Settlements (BIS) has successfully completed a pilot retail CBDC pilot called Project Icebreaker.
The central banks of Israel, Norway, and Sweden collaborated on a project with the Bank for International Settlements (BIS) that examined the use cases for CBDCs in international retail and remittance payments.
In a report released on March 6, the BIS stated that Project Icebreaker, a project involving the bank’s Innovation Hub Nordic Centre testing the technological viability of connecting domestic CBDC systems through the Central Bank of Norway, the Bank of Israel, and Sveriges Riksbank, had been completed.
The BIS found that a “hub-and-spoke” architecture between domestic systems may “lower settlement and counterparty risk by employing coordinated payments in central bank money and complete cross-border transactions within seconds,” according to the paper.
The paper stated that without a hub-and-spoke strategy, each retail CBDC system (or rCBDC) would need to establish individual particular network and infrastructure configurations in order to communicate with other CBDC systems.
It’s possible that communication between these CBDC systems won’t be standardized via a common interface; rather, it will be a custom integration between each pair of rCBDC systems. This could pose threats to cyber security and would be difficult to support and maintain.
Should the central banks of Israel, Norway, and Sweden proceed with issuing a digital shekel, digital krone, and digital krona, respectively, the study could provide the foundation for a cross-border payment system.
After a month-long test that enabled $22 million in cross-border transactions, the bank declared a CBDC pilot including the central banks of Hong Kong, Thailand, China, and the United Arab Emirates to be “successful” in October 2022.
The Sand Dollar, a central bank-issued CBDC, was made available to all Bahamians in 2020, making the Central Bank of the Bahamas the first central bank in the world to do so.
Chinese central bank reportedly distributed millions of digital yuan over the Lunar New Year holidays. Other nations have advanced with large-scale trials of digital currencies.
