For now, central banks around the world are still working on developing and testing their own CBDCs, but there are new ones that are joining the race all the time. The Bank of Israel, for example, reportedly just launched a cryptocurrency pilot program of its own, with plans to create a CBDC using Ethereum’s network.
However, it would appear that the project is bound to run into a number of challenges.
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So far, there are several major nations that are taking a lead in the CBDC development, including China, Sweden, Japan, and France. All of these countries were working on their own CBDCs for years at this point, so they do have quite the advantage on the newcomers such as the central bank of Israel.
Israel is in the initial stages of CBDC development, according to recent reports, and they decided to use Ethereum (ETH/USD). The central bank’s CBDC Project Manager, Yoav Soffer, explained that they decided to use ETH technology for a trial, not because they expect this will be the technology they will use, but because it was available.
The purpose of this trial is simply to try and identify the advantages and disadvantages of digital currencies, and for that alone, Ethereum is just as good a solution as anything else.
However, Soffer did say that the initiative has been very challenging. He pointed out the complexity of the project, which makes it difficult to predict how long the testing of the project might last, or when it will end.
The challenges are many, starting with uncertainty about whether a digital currency would serve the local population’s needs, in the first place. The infrastructure for a product of this kind is not ready to survive in the long term, and there is no backup solution in case of the network’s breakdown.
And, of course, the bank has to create a CBDC to be accessible and competitive compared to other types of payment.
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