Norway, Sweden, And Israel Plan A Joint CBDC Development With Bank of International Settlements

As CBDCs get more popular, the Bank of International Settlements (BIS) is partnering with three central banks to develop them.

Stablecoins are getting more popular, not just those available for trade on exchanges. Various Central Banks have been exploring the idea of creating their own CBDCs, which are basically fiat-pegged stablecoins, for their respective countries.

The latest development on this front features a partnership between the BIS and the Central Banks of Norway, Sweden, and Israel. The three countries hope to create a payment network to ease cross-border funds transfer among them and the rest of the world.

What They Stand To Gain

CBDCs are a much cheaper and faster way of transferring funds across borders and between banks, and any country that utilizes them reaps big in terms of how much is saved. Also, CBDCs, while using crypto technology, is a more transparent way of initiating and closing transactions. The three central banks in question will partner with the Innovation Hub at BIS to develop digital currencies. This is in line with the goals of the G20 to overhaul the financial systems.

The initial objective of the team-up is to test the feasibility of using CBDCs. Upon the completion of the development and deployment of the CBDCs, a report will be made available within the first quarter of 2023. The report will tell whether or not digital currencies can be fully utilized in extended economies.

It’s Not The First Joint Venture On CBDCs

In January 2021, the BIS partnered with the Central Banks of Singapore, Australia, Malaysia, and South Africa to initiate a similar pilot project. This shows that CBDCs are increasingly gaining favor across the world. Iran is also among other countries that have run CBDC pilot projects. Other governments mulling CBDC development include the United States, Ukraine, and the UK, among many others.

Basically, CBDCs are the digital version of a nation’s currency. They are created and issued by the Central Bank for use by banks. They enjoy the same government guarantees accorded to the fiat monetary system, meaning that they’re also subject to the same monetary policies as fiat.