Friday, June 21, 2024

The Bank for International Settlements (BIS) just released information about a trial called Project Icebreaker. The purpose of this trial was to investigate what could happen if a digital currency made by central banks were used around the world. This experiment tested whether it’s technically possible to make cross-border transactions between different types of digital currencies.

Project Icebreaker

The Bank for International Settlements (BIS) recently published a report that says most people who invested in cryptocurrencies lost money over the past seven years. This means BIS thinks it’s important to make rules about crypto and develop new digital currencies called Central Bank Digital Currencies (CBDCs).

After a report, Agustin Carstens who is the manager at BIS said that crypto assets have failed to beat fiat currencies created by central banks. He also warned that if central banks don’t stay on top of technology improvements, others would step in and take over.

On March 6th, 2023, the Bank of International Settlements (BIS) released their report called “Project Icebreaker: Breaking New Paths in Cross-Border Retail CBDC Payments”. This study that the BIS did discusses how the Innovation Hub Nordic Centre partnered with central banks in Norway, Israel, and Sweden. The goal of Project Icebreaker is to connect these countries’ digital currencies using a hub-and-spoke model.

The BIS reported that it’s important to consider legal aspects for the Icebreaker hub-type approach. Cecilia Skingsley, head of BIS Innovation Hub, said that Project Icebreaker is special by giving central banks a lot of freedom in creating a digital currency (CBDC) for domestic retail transactions, but also allowing it to be used internationally.

The BIS report claims that in order to make Icebreaker work in real life, different kinds of technology need to be used, and the ability to keep things private while also making sure people follow certain laws must be supported. Three technologies were chosen for this project: Ethereum Quorum for Israel, Hyperledger Besu for Norway, and Corda Network for Sweden.

Central banks can create their own type of digital currency (called CBDC) and connect with each other to make cross-border payments. The BIS report recommends that these central banks should use conditional settlement options and the same messaging/addressing standards used today.

Andrew Abir, the deputy governor at the Bank of Israel said that if Israel wants to launch a digital shekel, it must meet global standards so Israelis can use it for cross border payments. He also talked about how important this project has been for Israel and central banking communities.

What’s your opinion on Project Icebreaker, digital currency used by countries (CBDCs) and payments made with these digital currencies between different countries? Let us know what you think in the comments section.

Picture Credits: Shutterstock, Pixabay, Wiki Commons


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