“Project Icebreaker” Successfully Completes Study on Retail Central Bank Digital Currency (CBDC) for Cross-Border Payments

03/06/2023 10:09 • Blockchain Buzz • 139 views

It is reported that the “Project Icebreaker” jointly sponsored by the Bank for International Settlements (BIS) and the central banks of Israel, Norway and Sweden has successfully completed a study on the potential advantages and disadvantages of using retail central bank digital currency (CBDC) in international payments.

BIS and several central banks carried out cross-border retail CBDC experiment “Project Icebreaker”

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The Bank for International Settlements (BIS) has jointly sponsored a project with the central banks of Israel, Norway, and Sweden called “Project Icebreaker” to study the potential benefits and drawbacks of using retail central bank digital currency (CBDC) in international payments. The study examines the possible implications of using a CBDC to facilitate cross-border transactions.

One of the potential benefits of using a CBDC in cross-border payments is the speed and efficiency it could provide. Currently, cross-border payments can take days to clear due to the involvement of multiple intermediaries, such as correspondent banks. CBDCs could potentially eliminate the need for these intermediaries, leading to faster and cheaper transactions.

Another potential advantage is the increased transparency of transactions. CBDCs could potentially reduce the risk of money laundering and terrorist financing by allowing central banks to track transactions more easily. Additionally, CBDCs could enhance financial inclusion by providing people without access to traditional banking services with a secure and affordable means of making transactions.

However, there are also potential disadvantages to using CBDCs in cross-border payments. One concern is that it could lead to a loss of privacy for users. CBDCs could potentially provide central banks with access to personal data, which could raise privacy concerns. Additionally, the adoption of CBDCs could lead to a concentration of power, with central banks potentially gaining greater control over the financial system.

The successful completion of the study marks an important milestone in the exploration of CBDCs for cross-border payments. The BIS and participating central banks have demonstrated a commitment to understanding the potential advantages and disadvantages of CBDCs, providing valuable insights that could inform future decisions about their implementation.

In conclusion, “Project Icebreaker” has successfully completed a study on the potential benefits and drawbacks of retail CBDCs for cross-border payments. While there are several potential advantages, including increased speed and efficiency and enhanced transparency, there are also potential disadvantages, such as a loss of privacy and a concentration of power. However, the findings of the study provide valuable insights that could inform future decisions about CBDC implementation.

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