BIS develops cross-border retail CBDC payment system

Quick Take

  • The Bank for International Settlements has wrapped up its “Project Icebreaker,” together with the central banks of Israel, Norway and Sweden.
  • A new report outlines a model for a cross-border payment system between domestic CBDCs.

A cross-border system connecting central bank digital currencies could allow for cheaper and safer global payments, according to a report published by the Bank for International Settlements on Monday. 

The Basel-based bank for central banks’ Innovation Hub, in cooperation with the central banks of Israel, Norway and Sweden, has wrapped up “Project Icebreaker” to find solutions for DLT-based cross-border transactions.

The project “first allows central banks to have almost full autonomy” when designing their consumer-facing digital currencies before providing a “model for that same CBDC to be used for international payments,” said Cecilia Skingsley, who leads the BIS Innovation Hub, in the report.

As jurisdictions worldwide are racing to develop their own CBDCs, this proposal aims to allow for interoperability between national infrastructures and reduce settlement and counterparty risks while cutting time and costs for transactions.

“Although domestic payments have become less expensive, safer and more efficient, payments across currencies are still associated with high costs, slow speed and risk,” said Aino Bunge, deputy governor of Sweden’s Sveriges Riksbank. “When exploring CBDCs, it is important to include cross-currency opportunities from the start.”

A ‘hub-and-spoke’ model

Project Icebreaker proposes a