The Bank of Israel Deputy Governor, Mr. Andrew Abir, has released a statement reinforcing the bank’s determination to stay on top of technological advancements within the financial sector. During his speech at the Engines of Israeli Ecosystem conference, the governor highlighted several potential benefits of adopting the digital shekel, shedding light on the possible benefits to the overall financial sector.
In his speech, the deputy governor stated that the CBDC is, at this point, still an action plan; however, there are strong intentions to increase digitization, and the Bank of Israel is constantly brainstorming for the most appropriate digital shekel design and implementation strategies.
The Bank of Israel will roll out a sandbox to test the possibilities of the digital shekel. According to the plans, the controlled environment will allow for rigorous testing of digital technologies and financial innovations to help develop the digital shekel the right way. The move will allow several financial institutions and permitted stakeholders to experiment with the existing technologies in order to identify loopholes and ensure a market-ready product is built.
The Bank of Israel’s Deputy Governor’s Sentiments of CBDC
“The digital shekel will not be developed by some anonymous Satoshi Nakamoto,” the official said. “Everyone will know who is behind the digital shekel and who is responsible for it – it will be the central bank, the same Bank of Israel that stands behind the cash we all know and trust.” The Deputy governor said.
The statement came as an effort to sensitize the public about the fundament differences between mainstream cryptocurrencies like Bitcoin and the proposed digital shekel. He clearly outlined the similarities the proposed CDBC will share with the typical cash controlled by the Bank of Israel, saying that holding the CBDC will not be any different from keeping cash in the bank.
‘The product I am talking about is, of course, the digital shekel. First, let’s recall – a digital shekel is a liability of the Bank of Israel to the public – and in that sense, it is similar to cash, whose holding does not involve credit risk. This unlike a bank deposit or a payments wallet, which involves a risk that may be small but not zero. On the other hand, the digital shekel is… digital, and in that sense, it is somewhat similar to the money we hold in a bank account.’
The Deputy governor completed his speech by saying that the Bank of Israel, just like many other central banks, is still in the early stages of decision-making regarding the CBDC. The bank has not yet made a decision on the possible issuance of the digital shekel, as it is still just an action plan. The current happenings are strategic steps taken by the bank to ensure readiness for the future, should it be deemed fit to commission the development and rollout of the digital shekel.
This report was sourced from the Bank of Israel website.
