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The Bank for International Settlements (BIS) and the central banks of Israel, Norway and Sweden are launching Project Icebreaker, a joint exploration of how central bank digital currencies (CBDCs) can be used for international retail and remittance payments. using a hub-and-spoke model. The project will run through the end of the year, with a final report expected in the first quarter of 2023.

Central banks of Israel, Norway and Sweden team up with the BIS to explore retail CBDC for international payments

Norges Bank plans to prepare a recommendation by end-2025 on whether a retail central bank digital currency (CBDC) should be introduced in Norway and in what form. The just-completed fourth phase consisted of experimental testing of technical solutions, analysis of scenarios for the payment system, evaluation of consequences for liquidity management and monetary policy and a review of the legislative changes necessary to permit the introduction of a CBDC. The fifth and final phase will analyse the possibilities afforded by, and the impact of, introducing a retail CBDC and test candidate solutions, and also research new forms of settlement in central bank money that can facilitate innovation in the financial system (e.g., wholesale CBDC). Norges Bank also published a research paper CBDC-related paper on potential effects of a CBDC on liquidity and monetary policy. https://www.norges-bank.no/en/news-events/news-publications/Reports/Norges-Bank-Papers/2023/memo-22023-dsp-rapport-fase-4/

In line with the recommendations of an internal working group, Norges Bank will test various technical solutions for a central bank digital currency (CBDC) over the next two years. One of the aims of technical testing is to find a preferred solution if it becomes relevant to introduce a CBDC in Norway. Any introduction of a CBDC will still lie some time in the future. The consultative report is currently available in Norwegian only, but an English translation will be published soon.

The Bank for International Settlements (BIS) is expanding its BIS Innovation Hub with the establishment of new Hub centres across Europe and in North America in cooperation with member central banks. In the next two years, the BIS will open centres in collaboration with the Bank of Canada (Toronto), the Bank of England (London), the European Central Bank/Eurosystem (Frankfurt and Paris) and four Nordic central banks (Danmarks Nationalbank, the Central Bank of Iceland, the Central Bank of Norway and Sveriges Riksbank) in Stockholm. The BIS will also form a strategic partnership with the Federal Reserve System (New York).

BRØK, the Norwegian government public blockchain-based platform to track unlisted stock ownership, has moved into the sandbox phase. It is using Arbitrum, a layer 2 scaling solution for Ethereum with lower transaction costs. The solution is GDPR compliant, so personal information is not stored directly on the blockchain. However, it uses the Ceramic protocol for the personal information, an open distributed database that allows for data to be deleted and corrected, as required by GDPR

"In our overview of open banking in Europe, we look at what open banking really means in Europe relative to the rest of the world and caveat that its evolution into open finance is more than just about expanded scope. We then justify our choice to focus on the Netherlands, France, Spain and Switzerland instead of on Europe's top-four open banking performers of Sweden, Denmark, Norway and the UK."

"Nahmii AS are delighted to announce that we have been chosen to work with Norges Bank (the central bank of Norway) on their upcoming experimental CBDC sandbox project. This prestigious award confirms Nahmii AS's position as a global leader in the blockchain space and represents another milestone for the Bergen-based company."

The Bank for International Settlements (BIS) Innovation Hub and the and the central banks of Israel, Norway and Sweden,  concluded Project Icebreaker, which studied the potential benefits and challenges of using retail central bank digital currencies (CBDCs) for cross-border payments. In the Icebreaker model, a cross-border transaction is broken up into two domestic payments, one in each domestic system, so the CBDC never leaves its own domestic system. Foreign exchange (FX) providers buy one currency in one system and sell the other currency in the other system. Settlement is via a coordinated payment-versus-payment (PvP) arrangement using hash time locked contracts (HTLC), going a long way towards eliminating counterparty risk in the FX transaction. FX providers submit FX rates to the Icebreaker hub, which selects the best rate to be presented to the payer for each payment request. The number of connections between retail CBDC systems are kept to a minimum by the hub-and-spoke approach. The Icebreaker hub only routes payment messages and does not act upon them. The only information it acts upon is the data from FX providers, which are used when identifying and selecting the best FX rates for the payer.

"Nexus or Icebreaker? Two competing ideas are jostling for attention, each promising to reshape the inefficiency-ridden landscape of moving money from one country to another. Instead of trying to choose between them, central banks ought to give both a shot. The European payment system recently did a trial linkup with Malaysia and Singapore under the Bank for International Settlements' Nexus protocol, designed to transfer funds between bank accounts in different countries under 60 seconds. Meanwhile, the monetary authorities of Israel, Norway and Sweden have tested a separate BIS-backed initiative that achieves the same goal of fast cross-border retail payments. Project Icebreaker uses central bank digital currencies, or CBDCs, instead of bank accounts."

Norges Bank published the results of a survey, conducted in January and February 2024, on the Norwegian population's awareness, ownership and use of crypto-assets. 96% of the Norwegian population aged 16 and over are aware of crypto-assets. 15% of the population have owned or own crypto-assets, and 11% of the population owned crypto-assets at the time of the survey. 73% of those who know about crypto-assets rate their own knowledge of crypto-assets as "very little" or "quite little". 2 out of 3 current crypto-asset owners have 5% or less of their financial savings in crypto-assets.

Nahmii AS, a Norwegian software company, announced that, as part of its ongoing work with Norges Bank, it's making the source code for the central bank's CBDC sandbox publicly available. Nahmii's work is focusing on defining and commissioning a sandbox production environment with open sourced services to allow for the testing of basic token management use cases, including minting, burning and transferring ERC-20 tokens. (Nahmii is an Ethereum layer-2 scaling protocol.)

Norges Bank, as part of the fourth phase of its central bank digital currency project (CBDC), published a memo that assesses the legislative amendments that are expected to be required in order to introduce CBDC. Other parts of the fourth phase experimental testing of technical solutions in combination with further analysis of the need for and consequences if a CBDC is introduced.

The future of P27 Nordic Payments (P27), which launched in 2019 with the aim of delievering fast, cross-border, multi-currency account to account payments across the Nordic region, is uncertain, after it withdrew its clearing licence application from the Swedish Financial Supervisory Authority. P27 is owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank. P27 CEO Paula da Silva said that "it is evident that our vision was too ambitious and complex... [and] we need to reassess our future ambition in the Nordic payments market."