The central bank of Israel conducted a survey to find out if a digital shekel currency could be issued. Most of the responses were positive. The regulator stated that many of those who participated in the public consultations supported the development of the project.
Bank of Israel releases results from consultations on the Digital Shekel Project
The paper was published by Israel’s Monetary Authority. It describes the results of public consultations that were held to collect opinions from interested parties regarding its central bank digital currency ( CBDC). The regulator said it received 33 responses. Half of them came from outside the country and the remainder from the fintech community.
The plan to issue a digital Shekel has been supported by most respondents. They point to several advantages, such as the possibility to promote competition in the payment market. The new infrastructure of the digital currency could encourage innovation in Israel’s payment system. This is despite criticisms that it is too concentrated and has high entry barriers.
Participants believe that the main reason for issuing the CBDC should be to promote financial inclusion. This is something that the Digital Shekel Steering Committee considers an added benefit. Others suggested that the CBDC should be a priority in order to develop the fintech sector and reduce cash system costs.
Respondents are split on privacy. Some want the digital shekel to have cash-like features that provide anonymity, while others support transaction confidentiality and anti-money laundering rules that do not hinder efforts to fight the “black economy”.
Participants also suggested other uses for the digital shekel, such as the transfer government payments through designated tokens. These tokens would allow payments for specific purposes. Institutions and non-governmental organizations could use the CBDC to make dedicated transfers in areas such as healthcare provision and food supply.
Bank of Israel stated that it is considering launching its digital currency in the latter part of 2017. The project was abandoned in 2017 but work resumed in spring 2021 when regulator created a model for the CBDC. Most responses favor the use of distributed ledger technology. Although the Bank of Israel has yet to decide on the digital shekel, it stated in March that it does not consider the currency to be a threat to its banking system.
