Today the central banks of Israel, Norway and Sweden and the BIS Innovation Hub shared the results of Project Icebreaker, a cross border central bank digital currency (CDBC) research project.
There have been several cross border CBDC initiatives, but to date, they have all focused on using interbank or wholesale CBDC. Project Icebreaker is the first to explore connecting retail CBDCs in a hub and spoke model as a cross border CBDC application.
The domestic CBDC does not travel across borders. Instead, the payment goes to a foreign exchange (FX) provider who exchanges the domestic CBDC for a foreign CBDC. Unlike current payment systems where the payment provider is usually also the FX provider, in Icebreaker there’s price competition between FX providers which addresses one of the biggest cost issues with cross border payments.
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