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Central banks conclude cross-border CBDC experiment, Project Icebreaker

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In the tests, a cross-border transaction is broken down into two domestic payments, facilitated by a foreign exchange provider active in both domestic systems.

In most existing cross-border payment systems, the payer has no choice regarding the exchange rate, as it has no control on 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.

This competitive set-up mitigates the risk of insufficient liquidity in the desired currency pair, which can drive fees up and even delay the transaction.

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