The Bank for International Settlements (BIS), in collaboration with the central banks of Israel, Norway, and Sweden, has completed Project Icebreaker. The project was aimed at exploring the potential benefits and challenges of using retail central bank digital currencies (CBDCs) in cross-border payments. It evaluated the feasibility of cross-border and cross-currency transactions between different experimental retail CBDC systems. 

In the tests conducted, international payments were broken down into two domestic payments, facilitated by two different foreign exchange providers.

The project highlighted the advantages of such a model compared to traditional cross-border payments, where "the payer has no choice regarding the exchange rate as it has no control over who the provider of foreign exchange conversion is." In the model developed by the Icebreaker project, many foreign exchange providers can submit quotes to the system’s hub, which automatically selects the cheaper one for the end-user." 

Additionally, the Icebreaker model uses coordinated payments in central bank money to offset settlement and counterparty risk, as well as carrying out international transactions almost immediately, with minimal integration requirements and compatibility with a variety of technologies. 

The project has come at a time when central banks face important decisions on interoperability and cross-border usage of CBDCs, as set out in a report titled ‘Options for access to and interoperability of CBDCs for cross-border payments.

The report was published by the BIS Innovation Hub, the BIS-housed Committee on Payments and Market Infrastructures (CPMI), International Monetary Fund (IMF), and World Bank in September 2022. 

The successful completion of Project Icebreaker has demonstrated the potential of using CBDCs in cross-border payments. The project has proven that the hub-and-spoke model used in the tests has advantages compared to traditional cross-border payments.