The Bank of Israel has already put a Digital Shekel to the test

  • Abir announced the news at an IDC Herzliya Fair Value Forum conference
  • When asked if the Bank of Israel had already conducted a test of a digital shekel, Abir said yes
  • However, Abir expressed his scepticism about the possibility of an Israeli CBDC being established

Israel has already conducted a pilot examination of a digital shekel cryptocurrency, according to Deputy Governor Andrew Abir of the Bank of Israel, who revealed – perhaps unintentionally – at a convention of the IDC Herzliya’s Truthful Worth Discussion board. In response to a question near the end of the panel, Abir mentioned that the Bank of Israel had already run a digital foreign money pilot. 

Another member of the panel was taken aback and asked, Could you have already issued a coin? In the affirmative, Abir replied. However, Abir stated that he does not believe that a central bank digital currency (CBDC) will ever be launched. Abir stated, he had previously estimated that the chance of getting a CBDC within five years is 20%. His estimate has risen slightly in the last year, primarily as a result of other countries’ progress, but it’s still less than a 50 percent chance.

Israel’s financial institution’s plans

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The Bank of Israel announced in May that it was working on a plan to provide a digital foreign currency. The idea of issuing such a foreign money has been discussed since 2017, but it has decided to speed up its analysis and preparation for a possible issuance in light of the rapid developments in the digital financial system and in funds, as well as the work of the world’s leading central banks on the issue.

A CBDC would be based on distributed ledger technologies similar to blockchain, but it would be distinct from popular cryptocurrencies like Bitcoin. While cryptocurrencies do not belong to any particular country and some are defined by the lack of a central authority to manage them, a CBDC issued by a country’s central financial institution can be regulated by the relevant state authorities.

In recent years, there have been significant and extremely rapid changes in the Israeli and international financial markets. While no central bank in a complex financial system has yet to issue a call for a venture that could result in the central bank issuing a digital foreign money, there has recently been a noticeable shift in global sentiment on the subject, and central banks in various major world economies have begun exploring the possibility of issuing a CBDC.

Abir’s thoughts on the digital Shekel Currency

According to Abir, Israel’s financial institution is most concerned with staying on top of rising global trends. Israel’s cost system is at least a decade behind that of other countries. However, we’ve started to close the gap in the last year with the distribution of infrastructure that enables contactless payments and access to digital wallets Abir explained. We’re in the midst of a disruptive expertise process, and we have no idea who will emerge victorious. 

Will it be banks, credit card companies, fintech, or large consulting firms? There will be changes in the coming years that we do not yet know about, but it is clear that the environment in five years will not be the same as it is now.

Abir scoffs at widespread expectations for a digital currency. He said he is sorry to break it to you, but it’s not going to get rid of the banks. For this purpose, no central financial institution will introduce a digital foreign currency. Banks will continue to play an important role in the overall cost system. 

Another factor that may disappoint you is that any digital currency issued by a central bank would not be designed as a form of protection against bitcoin. It’s a cost system we’re talking about. Bitcoin will not be a payment system or a foreign currency. In the best-case scenario, it’s a monetary asset; in the worst-case scenario, it’s a pyramid scheme.

Source: https://www.thecoinrepublic.com/2021/06/22/the-bank-of-israel-has-already-put-a-digital-shekel-to-the-test/