• Central banks around the world are exploring the possibility of issuing central bank digital currencies (CBDCs) as a digital version of their national currencies.
• The Bank for International Settlements (BIS) has completed a pilot project called Project Icebreaker to explore cross-border and cross-currency transactions between retail CBDC systems.
• CBDCs are made and managed by a central bank, and they exist in digital form and are often based on a distributed ledger like a blockchain.
Exploring Central Bank Digital Currencies
Central banks around the world are exploring the possibility of issuing central bank digital currencies, or CBDCs, as a digital version of their national currencies. The study on CBDC is centered on understanding the potential benefits and risks associated with this new form of digital currency.
About Project Icebreaker
The Bank for International Settlements (BIS) has finished a project called Project Icebreaker, which was a pilot for CBDC for retail use. The project was meant to see if cross-border and cross-currency transactions between experimental retail CBDC systems were technically possible and how well they might work in the future.
How do CBDCs Work?
CBDCs work like real money in that they can be used to pay for things, but they only exist in digital form and are often based on a distributed ledger like a blockchain. They are made and managed by a central bank, and they are usually kept in digital wallets that can be accessed through mobile devices or other digital platforms. When making purchases using CBDCs, users simply transfer the currency from their wallet to the recipient’s wallet just like with traditional currency. This could help people become less dependent on cash since it can be expensive to make and spread.
Goal Behind Project Icebreaker
Project Icebreaker’s goal was to find out how well a CBDC works for making payments across borders. It involved collaboration between four organizations including BIS Innovation Hub Nordic Center, Bank of Israel, Norges Bank, Sveriges Riksbank – who tested different ways to connect domestic systems when making cross-border payments such as splitting them into two domestic payments handled by foreign exchange providers who worked with different kinds of technology infrastructure setups..
Overall, this research is important because it gives us better insight into how well CBDCs may work in the future if implemented properly across borders, which could help promote economic growth while reducing costs associated with cash transactions. Furthermore, it provides us with better knowledge about all aspects pertaining to these new forms of digital currency so that governments can make informed decisions when considering them as options