A survey conducted by the Central Bank of Israel has found mostly positive responses from stakeholders regarding the possible issuance of a shekel digital currency. Many of the participants in the public consultations support the further development of the project, the regulator said.
Bank of Israel publishes results of consultations on Digital Shekel project
Israel’s Monetary Authority recently released a paper detailing the outcome of public consultations conducted to solicit views from interested parties on its central bank digital currency (CBDC) Project. The regulator said it received 33 responses, half of which came from abroad and the rest from the country’s fintech community.
Most respondents supported the plan to issue a digital shekel, citing certain benefits such as the ability to encourage competition in the payments market. Then the new digital currency infrastructure could drive innovation in Israel’s payments system, which critics say is now fairly concentrated and has high barriers to entry.
Many of the participants believe that promoting financial inclusion, something the Digital Shekel Steering Committee sees as an added benefit, should be a key motivation for issuing the CBDC. Some have also suggested that developing the fintech industry and reducing costs in the cash system should also be among the priorities.
The issue of privacy has divided respondents, between those who insist the digital shekel should have cash-like features that offer complete anonymity, and others who support some level of transaction confidentiality while complying with anti-money laundering rules, so that efforts to combat the unreported “black” economy are not hampered.
Some of the participants also suggested additional use cases for the digital shekel, such as: B. the transfer of government payments, including through certain tokens that would allow payments for specific purposes. Food supply and healthcare are two areas where institutions and non-governmental organizations could use the CBDC for dedicated transfers.
The Bank of Israel announced that it is considering launching its own digital currency towards the end of 2017. The project was put on hold the following year, but work resumed in spring 2021 when regulators drafted a model of CBDC, with most responses now in favor of using distributed ledger technology. The Bank of Israel has yet to make a final decision on the digital shekel, but in March it said it did not see the currency as a threat to the country’s banking system.
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