Bank of Israel Reveals Innovative Design for Future Digital Shekel
The Bank of Israel has been diligently researching the concept of a Central Bank Digital Currency (CBDC) since 2017. Recently, the central bank released a potential design for a digital shekel (DS), which is being hailed as a significant milestone in the digital currency journey. While the decision to officially launch the digital shekel has yet to be finalized, this progress highlights the potential benefits of a CBDC in Israel’s financial landscape.
What is the Digital Shekel?
The digital shekel aims to serve various purposes, catering to both retail and wholesale transactions. It is designed to be accessible to a wide user base, including:
- Children
- Foreigners, including tourists
- All types of businesses
- Public institutions
- Financial entities
Key Features of the Digital Shekel
The digital shekel is expected to function similarly to cash, providing a universal medium for transactions. Here are some of its key features:
- Immediate and Final Payments: All transactions will be executed instantly.
- Offline Payment Capability: The design will support payments even without an internet connection.
- Cost Efficiency: The central bank indicates that the digital shekel would be free for users and more affordable for businesses compared to existing digital payment solutions.
- Interoperability: It will allow transactions between different payment systems, ensuring flexibility for users.
Private Sector Involvement
The Bank of Israel envisions that private sector entities can leverage the digital shekel as a foundation for innovative payment solutions. This approach fosters a competitive and open marketplace, which helps to avoid the creation of “walled gardens” that can limit user options.
Expert Insights
Yoav Soffer, the project manager for the digital shekel initiative, emphasizes the importance of preparation and knowledge-sharing within the ecosystem. He states, “The Bank of Israel has not yet decided whether to issue a digital shekel, but it is important for us to prepare, and deepen the knowledge and understanding together with the ecosystem regarding each of the possible components of the digital shekel system.”
For more information on digital currencies and their impact on the financial sector, you can visit the Bank for International Settlements or read about the economic implications of CBDCs.
