The Bank for International Settlements, or BIS, has reported it will be partnering with the central banks of Israel, Norway and Sweden to explore international retail and remittance payments use cases for central bank digital currencies, or CBDCs.
In a Sept. 28 announcement, the BIS said the collaboration — named Project Icebreaker — will involve the bank’s Innovation Hub Nordic Centre testing key functions and the technological feasibility of interlinking domestic CBDC systems. The central banks will develop a new hub in which the Central Bank of Norway, the Bank of Israel, and Sveriges Riksbank can connect their proof-of-concept CBDC systems.
Beju Shah, the head of the Innovation Hub Nordic Centre, said the experiment will explore CBDC designs and architecture, as well as related policy concerns. The project aimed to improve cross-border payments using CBDCs by reducing costs and increasing speed and transparency, with a final report expected in the first quarter of 2023.
“Efficient and accessible cross-border payments are of extreme importance for a small and open economy like Israel and this was identified as one of the main motivations for a potential issuance of a digital shekel,” said Bank of Israel deputy governor Andrew Abir. “The results of the project will be very important in guiding our future work on the digital shekel.”
The BIS reported on Sept. 27 that a CBDC pilot involving the central banks of Hong Kong, Thailand, China and the United Arab Emirates was “successful” after a month-long test facilitating $22 million worth of cross-border transactions. Other countries’ central banks have launched similar initiatives related to improving cross-border settlements, as institutions in Australia, Singapore, Malaysia and South Africa announced in September 2021.
The Central Bank of Norway, the Bank of Israel and Sveriges Riksbank have all been considering the benefits of rolling out their respective CBDCs, while China reportedly expanded the trials of its digital yuan to larger swaths of the country in September. In the United States, lawmakers and regulators have taken different approaches to explore the digital dollar, while a March executive order from President Joe Biden had government departments and agencies research the benefits and risks of a CBDC.
Interbank messaging system SWIFT has partnered with price oracle provider Chainlink to work on a proof-of-concept (PoC) project which would allow traditional finance firms the ability to transact across blockchain networks.
Chainlink co-founder Sergey Nazarov announced the project at its SmartCon 2022 Conference in New York on Sept. 28 alongside SWIFT strategy director Jonathan Ehrenfeld Solé.
At the conference, Solé said there is “undeniable interest from institutional investors into digital assets,” adding these traditional finance players want access to digital and traditional assets on one platform.
The PoC utilizes Chainlink’s cross-chain interoperability protocol (CCIP), allowing SWIFT messages to instruct token transfers across nearly every blockchain network, which, according to Nazarov, will accelerate the adoption of distributed ledger technology (DLT) blockchains across capital markets and traditional finance.
The SWIFT interbank messaging system is the most widely used platform for traditional cross-border fiat transactions, connecting over 11,000 banks around the world. In August the system recorded an average of 44.8 million messages per day.
However, transactions on SWIFT’s network can take several days to complete. The company has been exploring blockchain and DLT technology and central bank digital currencies (CBDCs) to facilitate faster payments.
Chainlink added this collaboration with SWIFT allows financial institutions to gain blockchain capability without replacing, developing and integrating new connectivity into legacy systems, something it said would require substantial modifications with an “exceptionally high” cost.
Mastercard CEO Michael Miebach said at a panel session in May on CBDCs that he doesn’t expect SWIFT to exist in five years, likely due to the rising competition from CBDCs for cross-border payments and settlements.
Mastercard later clawed back the statement, noting that Miebach simply meant that SWIFT's operations will continue to evolve from its current form.
The United Arab Emirates (UAE) Ministry of Economy has announced a new headquarters located where anyone in the world can visit — the Metaverse.
According to Gulf News, the announcement was made on Sept. 28 by UAE Minister of Economy Abdulla bin Touq Al Marri during the Dubai Metaverse Assembly, with the minister stating, “this is not a proof of concept, this is our third address” before giving a live tour of the virtual headquarters.
The headquarters will feature a multiple-story building, each serving a different purpose. Visitors will be able to take a ticket, which will prompt a “customer happiness center employee” to join the Metaverse and interact with the visitor.
The new headquarters will complement the ministry’s two existing offices in Abu Dhabi and Dubai, allowing the ministry to make digital services a bigger part of its operations following directives to do so from UAE leadership.
Visitors to the virtual headquarters will be able to sign legally binding documents, which eliminates the need for signatories to visit one of their physical locations in order to provide their signatures.
The headquarters also contains an auditorium that can facilitate virtual conferences and other events and meeting rooms that allow users to share a screen.
The announcement follows Dubai’s government's Metaverse strategy revealed on July 18, which aims to create virtual 40,000 jobs by 2030 and support the government’s vision of increasing the number of blockchain companies to five times the current number.
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