Bank of Israel Moves a Step Closer to Introduce CBDC in the Country

• At the end of 2017, the Central Bank began considering the CBDC project.
• It did not perceive a risk of “erosion” to its banking system.

The central Bank of Israel has stated that, even though it has yet to decide on introducing the “digital shekel,” public response to the initiative has been overwhelmingly favorable.

Reluctant Despite Positive Support

On Monday, the Bank of Israel summarized the public consultation findings on its central bank digital currency (CBDC) proposals, according to Reuter’s reports. Thirty-three replies have come from various industries, half of which are outside the United States, and 17 from the domestic fintech community. 

The Bank claimed:

“All of the responses to the public consultation indicate support for continued research regarding the various implications on the payments market, financial and monetary stability, legal and technological issues, and more.”

Privacy concerns have resurfaced as a problem, despite widespread perceptions that a digital shekel would promote competition in the payments system. According to a statement from the Bank, an anonymous currency may be preferred by certain critics but is impracticable for the battle against money laundering and illegal market activity. Research and development at all levels will be pursued by the Bank of Israel, as will a “fruitful dialogue with all interested parties at all stages of research and development.”

At the end of 2017, the Central Bank began considering the CBDC project. However, in May 2021, the Bank of Israel decided to bring it back after a year’s worth of investigation suggested that it be put on hold for the time being. Earlier this year, in November 2021, it announced that it would speed up its research. Concerning a possible digital shekel, the Bank of Israel said in March 2022 that it did not perceive a risk of “erosion” to its banking system.