Central bank digital currencies (CBDCs) are a potential avenue to reduce the cost and delays of cross-border payments. There have been several multi-CBDC initiatives, but all have focused on interbank or wholesale CBDCs. Today, Sveriges Riksbank, the Bank of Israel, and Norges Bank launched the Icebreaker Project, which aims to interconnect each central bank’s trial CBDC retail platforms.

“By interconnecting our current e-krona platform, developed in a test environment, with the other countries, we gain valuable lessons on cross-border payments using a CBDC,” said Mithra Sundberg, Director of the E-krona Division at Riskbank. from Sweden. “We also gain a better understanding of the important design and policy choices needed to ensure cross-border functionality if we decide to issue an e-krona.”

Project Icebreaker intends to enable international instant retail CBDC payments without using the correspondent banking system. Technology, architecture and design options will be explored along with policy issues. The experiments will be carried out until the end of this year in association with the new Nordic BIS Innovation Hub.

“Efficient and accessible cross-border payments are of the utmost importance for a small and open economy like Israel’s and this was identified as one of the main motivations for a possible issuance of a digital shekel,” said Bank of Israel Deputy Governor Andrew Abir.

Wholesale cross-border CBDC trials have posed some interesting challenges. To prevent the use of correspondent banking, a central bank would need to allow foreign banks access to its CBDC. That is a political challenge posed by the Dunbar Project, a project involving the central banks of Singapore, Malaysia, South Africa and Australia.

If retail CBDCs are directly interconnected, this could support P2P payments and avoid that tricky issue.

Another major multi-CBDC project is mBridge, in which the central banks of Thailand, Hong Kong, China, and the United Arab Emirates are participating. The Jura Project is a cross-border payment initiative between the central banks of France and Switzerland. And the Banque de France carried out a separate international payments project with the Monetary Authority of Singapore.