An investigation by the Central Bank of Israel has received a positive response from stakeholders about the possible issuance of a digital shekel currency. The regulator said many participants in the public consultation supported the continued development of the project.
Bank of Israel announces results of consultations on digital shekel project
Israeli Monetary Authority recently post A document details the results of a public consultation held to gather input from interested parties on its central bank digital currency (CBDC) project. The regulator announced that it had received 33 responses, half of which were from abroad and the rest from the country’s fintech community.
The majority of respondents have consistently supported plans to issue digital shekels, citing certain advantages, such as opportunities to encourage competition in the payments market. The digital currency’s new infrastructure, then, could spur innovation in Israel’s payments system, which critics say is now fairly centralized with high barriers to entry.
Many participants believe that advancing financial inclusion (an added benefit that the Digital Shekel Steering Committee sees as an added benefit) should be the main motivation for issuing a CBDC. Some also suggested that growing the fintech industry and reducing the cost of cash systems should also be among the priorities.
Privacy concerns divided respondents, insisting that digital shekels should have cash-like functionality, providing complete anonymity, while supporting a degree of transaction confidentiality, while maintaining anti-money laundering rules in an effort to combat unreported The “black” economy is not hindered.
Numerous participants also suggested other use cases for the digital shekel, such as transferring government payments, including through the designation of tokens for specific purposes. Food supply and healthcare provision are two areas where institutions and NGOs can use CBDC for specialized transfers.
The Bank of Israel has announced that it is considering launching its own digital currency by the end of 2017.The project was suspended the following year, but then resumed work in the spring of 2021, when regulators drafted a model CBDC, most responses now support the use of distributed ledger technology. The Bank of Israel has yet to make a final decision on the digital shekel, but said in March it did not see the currency as a threat to the national banking system.
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