Israel’s central bank launches potential digital shekel with a new action plan
The Bank of Israel is accelerating its research on the possible issuance of a digital currency by the central bank.
In a statement from the central bank today, the Bank of Israel said it was preparing an action plan to explore the benefits of a digital shekel for the economy. Although the bank said it has not yet decided whether to issue central bank digital currency or CBDC, it is willing to do so if the benefits “outweigh the costs and potential risks.”
The central bank said it might consider issuing a CBDC if it could meet the needs of the future digital economy and provide more efficient cross-border payments. In addition, the Bank of Israel hopes to reduce cash use and ensure that the public can make payments with “some privacy”.
The Central Bank of Israel has been considering the introduction of a CBDC since 2017 when the governor set up a cross-departmental group to investigate the problem. The following year, the Bank of Israel team recommended the issue of digital currency, saying, “No advanced economy has yet issued digital currency for widespread use.”
However, the exploration and use of CBDCs has increased significantly over the past three years, and countries like China have piloted their digital yuan project in major cities across the country. In addition, the Bahamas became the first country to issue its own CBDC – the sand dollar – in October 2020.