BIS Reports Central Banks of Israel, Norway and Sweden Trial CDBC Digital Payments and Remittances

Digital remittance attempts are starting. (photo: doc. pixabay)

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

In an announcement on September 28, BIS said the collaboration - named Project Icebreaker - would involve the bank's Innovation Hub Nordic Center to test key functions and technology feasibility to connect domestic CBDC systems. The central bank will develop a new hub through which the Central Bank of Norway, Bank of Israel and Sveriges Riksbank can link their proof-of-concept CBDC systems.

Beju Shah, head of the Nordic Hub Innovation Center, said the experiment would explore the design and architecture of the CBDC, as well as related policy issues. The project aims to increase cross-border payments using CBDCs 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 essential for a small and open economy like Israel and this was identified as one of the main motivations for the potential for digital shekel issuance,” said Bank of Israel Deputy Governor Andrew Abir, as quoted by Cointelegraph. “The project results will be critical in guiding our future work on the digital shekel.”

The BIS reported on Sept. 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 trial that facilitated USD 22 million worth of cross-border transactions.

Central banks of other countries have launched similar initiatives related to increasing cross-border settlements, as institutions in Australia, Singapore, Malaysia and South Africa announced in September 2021.

The Central Bank of Norway, the Bank of Israel and Sveriges Riksbank have all weighed the benefits of launching their respective CBDCs, while China reportedly expanded its digital yuan trial to a larger swath of the country in September.

In the United States, lawmakers and regulators have taken different approaches to exploring the digital dollar, while President Joe Biden's March executive order called on government departments and agencies to examine the benefits and risks of CBDCs.