Assessing the CBDC Concept in Israel, Sweden, and Norway

Assessing the CBDC Concept in Israel, Sweden, and Norway

September 29, 2022 0 By Alicia Hagen

The BIS (Bank for International Settlements) joined hands with the central banks of Norway, Israel, and Sweden to analyze the possible CBDC (central bank digital currencies) applications for global retail and international remittance payments.

The BIS is an organization of 61 central banks globally. It boasts innovation hubs all over the globe to analyze new monetary technologies like CBDCs, trying to understand how the financial world can employ virtualized national currencies.

The Icebreaker

The BIS release of September 28 showed the deal, dubbed ‘Project Icebreaker,’ would include the central bank’s Innovation Hub Center analyzing primary gears and the technological potential to integrate local CBDC mechanisms.

The PoC (proof-of-concept) CBDC mechanisms would allow the Central Bank of Sveriges Riksbank, the Bank of Israel, and the Bank of Norway to connect to a newly established central banks’ hub. Innovation Hub Center director Beju Shah stated that the project would focus on CBDC concepts and design relevant policies.

The project targets to enhance cross-border transactions through CBDCs by trimming costs and improving transparency and speed. Meanwhile, the final report is due in Q1 2023. Andrew Abir of the Bank of Israel stated that accessible and efficient cross-border transactions are vital for an open and small economy like Israel.

That prompted the bank to consider introducing a digital shekel. The project’s impact would be crucial in digital shekel’s future.

BIS trusts issues with global payments include slow speeds, high costs, insufficient transparency, and restricted access. Furthermore, the BIS Innovation Hub declared the success of research involving multiple Asian CBDs that allowed the conversion of over $22M in foreign currency.

Meanwhile, the IMF (International Monetary Fund) claims the digital version of national currencies may lower costs for cross-border payments. Project Icebreaker will analyze low charges and almost instantaneous retail transactions. The final report will likely come in in 2023 Q1.

CBDCs’ Long-Contemplated Plans

The Bank of Israel, the CBN (Central Bank of Norway), and Sveriges Riksbank have been researching the benefits of introducing their respective CBDCs. Meanwhile, reports suggest China stretched its digital yuan testing in September.

While Biden’s March executive order advised government agencies and departments to study the disadvantages and advantages of CBDCs, US regulators and lawmakers have utilized multiple approaches to investigate the digital dollar.