The central banks of Sweden and Israel announced Wednesday (Sept. 28) that they will start exploring how central bank digital currencies (CBDCs) can be used for international retail and remittance payments in collaboration with the central bank of Norway and the Bank for International Settlements.
The initiative, dubbed Project Icebreaker, will see the involved parties develop a “hub” to which participating central banks will connect their domestic proof-of-concept CBDC systems. The press releases stated that the project’s objective is to test specific key functions and the technological feasibility of interlinking different national CBDC systems.
The project will run through the end of the year, with a final report expected in the first quarter of 2023.
Separately, the three central banks involved in Project Icebreaker have each been exploring the possibility of issuing digital equivalents of their existing fiat currencies. However, because these CBDCs have so far been developed in relative isolation, how the digital shekel (Israel), the e-krona (Sweden), and the e-kroner (Norway) would interoperate has yet to be properly investigated.
Related: Digital Shekel Won’t Disrupt Israel, Central Bank Says
“Sveriges Riksbank is collaborating in this experiment as part of the e-krona project,” Mithra Sundberg, head of the E-krona Division, said in a press release. “By interlinking our current e-krona platform, developed in a test environment, with the other countries we gain valuable lessons regarding cross-border payments using a CBDC. We also gain better understanding of important design and policy choices needed to secure cross-border functionalities if we decide to issue an e-krona.”
“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,” Bank of Israel Deputy Governor Andrew Abir said in a press release.
“We are privileged to be exploring the topic in this project together with partners that have vast knowledge and experience on CBDCs as well as on cross-border payment policies. The results of the project will be very important in guiding our future work on the digital shekel,” Abir added.
Norway’s central bank, Norges Bank, which recently made the source code for its CBDC sandbox publicly available and confirmed that the prototype infrastructure for the project is based on Ethereum technology, had not released a statement at the time of writing.
In the releases issued by the Bank of Israel and the Riksbank, Torbjørn Hægeland, Norges Bank’s Executive Director for Financial Stability, is quoted as saying:
“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.”
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