Israel Central Bank Contemplates Digital Shekel to "Modernize Payment Systems"

Tuesday, 12/09/2023 | 21:44 GMT by Jared Kirui
  • The Bank of Israel has been exploring the digital shekel since 2021.
  • Israel is collaborating with Hong Kong and the BIS to test retail CBDCs.
Israel

The Central Bank of Israel is considering the issuance of a digital shekel to enhance the country’s payment system. However, the decision to launch the financial instrument remains a topic of debate, echoing similar discussions in advanced economies globally.

The Governor of the Bank of Israel, Amir Yaron, shared these insights during a recent conference on digital currencies, highlighting the nation’s strides towards modernizing financial systems. Since November 2021, the Bank of Israel has been actively researching and preparing for the potential introduction of a digital shekel, Reuters reported.

Modernizing Payments

Israel’s central bank has collaborated with its Hong Kong counterpart and the Bank for International Settlements on a project dubbed Sela. This initiative has successfully demonstrated the feasibility of a retail CBDC, combining accessibility, competition, and cybersecurity measures. Israel initially considered launching a CBDC in 2017.

Governor Yaron pointed out that the rapid digitization of the economy makes working on a CBDC a logical step forward. He emphasized that if Israel decides to proceed, it will prioritize privacy in digital payments , offering a higher level of privacy compared to conventional digital means.

Besides that, the Israeli Ministry of Finance has taken a proactive approach to regulating Decentralized Autonomous Organizations (DAOs). According to a report by Finance Magnates, the Israeli Ministry of Finance announced in July the formation of a cross-agency team tasked with formulating regulations for DAOs.

Global CBDC Race Heats Up

Meanwhile, the race for the launch of CBDCs continues to gain momentum globally. Last month, Russia embarked on a pilot project for the digital ruble that was scheduled to kick off on August 15th. Collaborating with 13 banks and select clients, the country’s central bank is testing the digital currency’s viability in real-world scenarios.

Russia’s pivot toward digital currencies, particularly the digital ruble, is a strategic response to economic sanctions imposed by the US and its Western allies in the wake of the country’s invasion of Ukraine. These sanctions have disrupted traditional financial services, prompting Russia to explore alternative avenues to maintain its financial systems.

Elsewhere, the Bank of France is setting the stage for collaboration with private companies to introduce a central bank digital currency (CBDC) for both institutional and retail clients. In July, the central bank released a set of policy recommendations aimed at facilitating the launch of CBDCs within the country. This move was made as the Bank of France has been actively engaged in experiments related to wholesale CBDCs since 2020.

The Central Bank of Israel is considering the issuance of a digital shekel to enhance the country’s payment system. However, the decision to launch the financial instrument remains a topic of debate, echoing similar discussions in advanced economies globally.

The Governor of the Bank of Israel, Amir Yaron, shared these insights during a recent conference on digital currencies, highlighting the nation’s strides towards modernizing financial systems. Since November 2021, the Bank of Israel has been actively researching and preparing for the potential introduction of a digital shekel, Reuters reported.

Modernizing Payments

Israel’s central bank has collaborated with its Hong Kong counterpart and the Bank for International Settlements on a project dubbed Sela. This initiative has successfully demonstrated the feasibility of a retail CBDC, combining accessibility, competition, and cybersecurity measures. Israel initially considered launching a CBDC in 2017.

Governor Yaron pointed out that the rapid digitization of the economy makes working on a CBDC a logical step forward. He emphasized that if Israel decides to proceed, it will prioritize privacy in digital payments , offering a higher level of privacy compared to conventional digital means.

Besides that, the Israeli Ministry of Finance has taken a proactive approach to regulating Decentralized Autonomous Organizations (DAOs). According to a report by Finance Magnates, the Israeli Ministry of Finance announced in July the formation of a cross-agency team tasked with formulating regulations for DAOs.

Global CBDC Race Heats Up

Meanwhile, the race for the launch of CBDCs continues to gain momentum globally. Last month, Russia embarked on a pilot project for the digital ruble that was scheduled to kick off on August 15th. Collaborating with 13 banks and select clients, the country’s central bank is testing the digital currency’s viability in real-world scenarios.

Russia’s pivot toward digital currencies, particularly the digital ruble, is a strategic response to economic sanctions imposed by the US and its Western allies in the wake of the country’s invasion of Ukraine. These sanctions have disrupted traditional financial services, prompting Russia to explore alternative avenues to maintain its financial systems.

Elsewhere, the Bank of France is setting the stage for collaboration with private companies to introduce a central bank digital currency (CBDC) for both institutional and retail clients. In July, the central bank released a set of policy recommendations aimed at facilitating the launch of CBDCs within the country. This move was made as the Bank of France has been actively engaged in experiments related to wholesale CBDCs since 2020.

About the Author: Jared Kirui
Jared Kirui
  • 1081 Articles
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About the Author: Jared Kirui
Jared is an experienced financial journalist passionate about all things forex and CFDs.
  • 1081 Articles
  • 13 Followers

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