Central banks in Sweden, Norway, and Israel are working on digital currencies

The central banks of Sweden, Norway, and Israel have joined together to develop digital currencies.

Several central banks will work together on a "first-of-its-kind experiment" to see if digital currencies can be used to make payments across borders.

The central banks of Sweden, Norway, and Israel, as well as the Bank for International Settlements (BIS), are working together to test central bank digital currencies (CBDCs) for sending money across borders and making payments in stores.

The goal of the experiment, which is called Project Icebreaker, is to build a hub to which the central banks that are taking part can connect their proof-of-concept CBDC systems to test key functions and see if the technology will work.

The project is being done by the Sveriges Riksbank of Sweden, the Norges Bank of Norway, the Bank of Israel, and the BIS Innovation Hub Nordic Centre.

Cross-border payments often have high costs, take a long time, are hard to get to, and don't give enough information. The goal of Project Icebreaker is to make it possible to make immediate cross-border retail and remittance payments using CBDC systems at a much lower cost than with current systems, which usually require payments to go through several banks.

As cash is used less and less in Sweden, the Sveriges Riksbank is looking into the possibility of making a CBDC called the e-krona.

Sveriges Riksbank's e-krona division head, Mithra Sundberg, said, "Sveriges Riksbank is helping with this experiment because it is part of the e-krona project."

By connecting our current e-krona platform, which was built in a test environment, to those of the other countries, we learn important things about how to use a CBDC to make cross-border payments. We also learn more about the important design and policy choices we'll need to make if we decide to make an e-krona and want it to work across borders.

The e-krona isn't the only idea for a digital currency that Project Icebreaker could help with.

"The project's results will be very important for our future work on the digital shekel," said Andrew Abir, the Bank of Israel's deputy governor.

"Effective and easy cross-border payments are very important for a small and open economy like Israel, and this was named as one of the main reasons why a digital shekel might be issued."

Project Icebreaker will last until the end of the year, and the final report is expected in the first quarter of 2023.

The head of the BIS Innovation Hub Nordic Centre, Beju Shah, said, "This first-of-its-kind experiment will dig deeper into the technology, architecture, and design choices and trade-offs, and it will also look at related policy questions."

"These lessons will be very helpful for central banks that want to use CBDCs for international payments."

Mairead McGuinness, who is in charge of European finances, said earlier this year that a bill to make the euro digital could be introduced in the EU early next year. In the meantime, US President Joe Biden signed a plan for digital assets in the country, which could include a digital dollar.