BIS Publishes Report on “Project Icebreaker” – Develops Cross-Border CBDC Retail Payment Model –
The Bank for International Settlements (BIS) has released a report summarizing the “Project Icebreaker” attempt, which examined the potential benefits and difficulties of using a Central Bank of Retailers (CBDC) digital currency in cross-border payments. The experiment was designed to “test the technical feasibility of conducting cross-border – cross-currency transactions between different [distrubuted ledger technology]-based CBDC proof-of-concepts.”
Technical feasibility of cross-border CBDC retail payments allegedly proven in the Icebreaker Trial project
Central bank digital currencies (CBDCs) have been a major focus for the Bank for International Settlements (BIS) of late. BIS recently published a report claiming that most crypto asset investors have lost money over the past seven years. The report highlighted that the BIS insists that the crypto industry urgently needs to be regulated and a CBDC developed.
Following the report, BIS General Manager Agustin Carstens stated that crypto assets have already lost the battle against central bank-issued fiat currencies. Carstens also stressed the need for central banks to take responsibility for innovation and create a working CBDC. “If central banks are not innovative, others will step in,” Carstens warned.
On March 6, 2023, BIS published a report entitled “Project Icebreaker: Breaking New Paths in Cross-Border Retail CBDC Payments”. The BIS study highlights the involvement of the BIS Innovation Hub Nordic Center and central banks in Norway, Israel and Sweden in the project. Project Icebreaker aims to connect domestic CBDC systems using a “hub and spoke” model.
In addition, the BIS report emphasizes the need to address “legal considerations” for the Icebreaker Hub approach. Cecilia Skingsley, head of the BIS Innovation Hub, stated that Project Icebreaker is “unique in what it offers”.
“For the first time, it allows central banks to have almost complete autonomy in designing a domestic retail CBDC,” Skingsley said. “Then it offers a model for the same CBDC that can be used for international payments.
According to the BIS report, implementing Icebreaker in the real world “would require a range of technologies” and would need to improve both data protection and “AML/CFT compliance and monitoring.” The project used three technologies in each nation state, including Ethereum Quorum in Israel, Hyperledger Besu in Norway and the Corda network in Sweden.
A CBDC can be created in a customer-specific manner, and central banks can still “enter into a formalized linking arrangement to enable cross-border payments.” According to the BIS report, the author suggests that central banks should consider integrating conditional settlement and possibly adopt the current messaging and addressing standards in use today.
“If Israel is to issue a digital shekel, it would be very important that we do so in accordance with evolving global standards so that Israelis can also use it for efficient and accessible cross-border payments,” said Andrew Abir, Deputy Governor of Die Bank of Israel, in a statement. “While there is still a lot of work to do for the Icebreaker model to become a global standard, the lessons learned from this successful project have been very important to us and the central banking community,” added Abir.
What do you think of Project Icebreaker, CBDCs and cross-border CBDC retail payments? Do share your views on this topic in the comments section below.
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Source: Crypto News Deutsch
