The Bank of Israel, Norges Bank, Sveriges Riksbank and the Bank for International Settlements (BIS) are launching Project Icebreaker to explore how central bank digital currencies (CBDCs) can be used for international retail and remittance payments.

The project aims to develop a hub to which participating central banks can connect their domestic proof-of-concept CBDC system to test the technological feasibility of interlinking different domestic CBDC systems.

The architecture is designed to enable immediate retail CBDC payments across borders at a significantly lower cost than existing corresponding banking systems.

The project will run through the end of the year, with a final report expected in the first quarter of 2023.

“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. The results of the project will be very important in guiding our future work on the digital shekel,”

said Andrew Abir, Deputy Governor of Bank of Israel.

“This first-of-a-kind experiment will dig deeper into the technology, architecture and design choices and trade-offs, and explore related policy questions. These learnings will be invaluable for central banks thinking about implementing CBDCs for cross-border payments,”

said Beju Shah, Head of the BIS Innovation Hub Nordic Centre.