At Tel Aviv Fintech Week 2023, Yoav Soffer, advisor to the Deputy Governor of the Bank of Israel, addressed the topic of central bank digital currencies (CBDCs) as an effective cross-border payment option.
The conversation comes after the BIS concluded its research on international retail and remittance payments via CBDC between the central banks of Israel, Norway and Sweden. The BIS project is called "Project Icebreaker".
Sofer, who is also project manager for the central bank’s CBDC project, said that while domestic payments in Israel have become “very easy, convenient and cheap,” the same is not true for payments abroad. Soffer talked about the results of a sample transaction that took less than two minutes. In addition, he emphasized that this model will greatly reduce the cost of international remittances and be "more competitive in foreign exchange transactions." He went on to say that the technical requirements for countries to join the model are very limited, and once a prototype is built, joining should essentially be a domino effect.
However, he did say that the way in which liquidity is provided to CBDC providers, as well as the integration of policies, needs to be considered when adopting such a scheme. Privacy was another major consideration the BIS team became aware of during the project, Soffer said. While more than a hundred countries are studying the possibility of CBDCs, the sentiment surrounding these centralized digital currencies is mixed. They have useful features, such as efficient cross-border transactions, although some say they could threaten the future of consumers.
Former CFTC Chairman Christopher Giancarlo recently emphasized that CBDCs should protect privacy and not become a surveillance tool, as many fear. U.S. Rep. Tom Emmer also commented that they could be "easily weaponized" to spy on U.S. citizens.
