Israel has advanced its study of the advantages and risks of launching a digital shekel. This was stated by Yoav Soffer, head of the Bank of Israel–initiated project, according to Bloomberg.
As part of the initiative, during 2021 the research team interacted with technology companies in Israel and abroad, as well as with colleagues from other central banks.
Most responses were favourable in nature, but some experts expressed concerns about the design of the digital shekel, whose transactions could be entirely or almost free.
According to Soffer, the launch of the CBDC remains hypothetical, given its impact on the banking system. Overall, the study also considers the effect of the digital shekel on the economy, payment systems and credit markets.
After conducting Ethereum-based experiments the regulator outlined further technical studies to assess the viability of different types of digital currencies.
We are increasing resources in the project, both financially and in terms of people. The digital shekel has great potential to boost competition and innovation in the payments industry, — said Soffer.
Earlier, Israeli authorities first floated the idea of issuing a digital shekel in late 2017. The project was later frozen.
In May 2021, the Bank of Israel presented a working paper outlining the model and the benefits of the digital shekel for subsequent public consultations.
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