The Bank of Israel has announced that it is not rushing to launch its digital shekel, preferring to observe the developments surrounding the digital euro first.

Israel’s central bank is taking a cautious approach, waiting for the European Central Bank to make its move before deciding whether to proceed with its own digital currency initiative. In an interview, Bank of Israel Deputy Governor Andrew Abir mentioned that the country is keen to see the outcomes of the European Central Bank’s deliberations on issuing a digital euro by 2027.

“The big question is whether the public will adopt a digital currency,” Abir said, noting the significant leap from theoretical studies to convincing the public to use it.

The Bank of Israel began its exploratory research on the digital shekel in 2017, focusing on the possible benefits and challenges associated with issuing a central bank digital currency (CBDC).

The initial phase aimed to understand global trends in digital currencies, assess technological feasibility, and evaluate the potential impact on monetary policy and financial stability. In 2021, the Bank of Israel ramped up its efforts by establishing a dedicated task force to further investigate and develop the digital shekel.

In late May, the Bank of Israel initiated the Digital Shekel Challenge, inviting various sectors to develop applications for a potential CBDC. The pilot project aims to test the digital currency using a technological prototype that simulates the core system of the digital shekel and its API layer.

Abir emphasized that the central bank aims for the CBDC to create a “level playing field for payment providers,” enabling these providers to compete with financial lenders. He highlighted that a key advantage of a CBDC is that the payment provider does not hold the user’s money, which reduces credit exposure to that company. This mechanism allows for lower levels of supervision and capital requirements compared to traditional payment providers.

Explore more news on Global Crypto News to stay updated on the latest developments in the world of cryptocurrencies, investing, and finance.

Post Views: 10