Israel Trials Digital Shekel CBDC for Payments
2 min read
Israel Trials Digital Shekel CBDC for Payments
Israel is ramping up efforts to develop its own central bank digital currency (CBDC), known as the digital shekel. The Bank of Israel (BoI) has announced plans to collaborate with various service providers to create a sophisticated digital payments ecosystem that centers around this new form of currency. A translated version of the central bank’s statement revealed an initiative called the “Digital Shekel Challenge,” modeled after the “Project Rosalind” experiment conducted by the BIS Innovation Hub in partnership with the Bank of England, aiming to develop prototypes for an application programming interface (API).
Project Rosalind served as an inspiration for Israel’s new digital currency efforts. In the upcoming challenge, BoI will offer a sandbox environment comprising a layer of APIs. Competing participants will be tasked with creating real-time CBDC payment systems designed for public use. This initiative mirrors several collaborative fintech projects seen in other parts of the world.
In an interview, Shauli Rejwan, a managing partner at Masterkey Venture Capital based in Tel Aviv, outlined the specifics of the program. It is divided into three stages: initial application and presentations, providing access to the new network for selected projects, and a final presentation to judges, some of whom have previously spoken at cryptocurrency events. Rejwan envisions this effort as a potential bridge between the Web3 industry and government, despite the current exclusion of decentralized finance, zero-knowledge protocols, and permissionless solutions.
The central bank has extended an invitation to entities from the private, public, and academic sectors to participate in this experiment. They emphasized that priority will be given to innovative uses in the payments arena, whether these involve improvements to existing applications or completely new ones. This openness to innovation aims to uncover unique solutions tailored to niche scenarios as well.
On April 16, BoI’s deputy governor, Andrew Abir, expressed that competition from a digital shekel could benefit the nation’s economy. Abir voiced confidence that public support would follow the digital shekel’s development. He highlighted that unlike cryptocurrencies developed anonymously, the digital shekel would be backed by a trusted entity—the Bank of Israel.
Abir also mentioned that the digital shekel could benefit the central bank. Offering CBDC might compel traditional banks to offer higher interest rates to retain customers who now have the option to hold digital shekels. Public sentiment appears to align with Abir’s optimism.
A public consultation report released on May 11 corroborates this sentiment, indicating robust public support for continued exploration of the digital shekel and its implications. The report also highlighted a unified concern among respondents about potential privacy breaches associated with CBDCs.
Despite these privacy concerns, the overall response to the public consultation has been positive, emphasizing the importance of further research into the impacts on the payments market, financial and monetary stability, as well as the legal and technological issues the digital shekel might entail. This continued public dialogue ensures that various stakeholders’ views are considered in the digital currency’s development process.
Andrew Abirs insights on the potential benefits of the digital shekel are very reassuring. Exciting times ahead!
Public consultation and support for the digital shekel is crucial! Great to see the BoI valuing public opinion. 🗣️❤️
Digital shekel backed by BoI sounds like a reliable and innovative step for our economy! Looking forward to it. 💼🔒
The BoI’s focus on innovative payment solutions with the digital shekel is a giant leap forward. Kudos! 👏💳
All these grand plans, but no solid solution for the inevitable privacy breaches. This digital shekel could jeopardize our right to financial anonymity.
BoI’s collaboration with various sectors is a testament to their inclusive approach to innovation. Way to go! 💪🤝
What about the potential for cyber attacks? A digital shekel could be a massive target. Not confident in the security measures they propose.
This is disappointing. Israel should be focusing on more pressing issues than developing a digital currency.
Amazing to see Israel embracing cutting-edge technologies like CBDCs! The future of finance looks bright!
A digital shekel backed by the BoI could revolutionize the payments landscape in Israel!
Impressed by the BoI’s methodical and inclusive approach to CBDCs. The Digital Shekel Challenge is a great start! 🌟🤝
Love seeing Israel at the forefront of digital currency development. The future is digital!
Excited about the potential of the digital shekel to transform our financial system! Kudos to the BoI for their forward-thinking approach.
Bravo to the Bank of Israel for encouraging participation from a wide range of sectors in the Digital Shekel Challenge!
Andrew Abir’s confidence in the digital shekel is contagious! Can’t wait to see its impact on the economy.
Sure, its backed by the Bank of Israel, but that doesn’t make it foolproof. Too many unknowns and potential pitfalls.
Integrating such a system sounds complicated and prone to failure. The complexities of digital currencies are too risky to implement hastily.
Excited to see Israel taking big steps in the digital finance world with the digital shekel!
I don’t understand why we’re imitating projects like ‘Project Rosalind’. Can’t Israel create something truly original and beneficial for its people?
So the Bank of Israel thinks they’ll get public support just because they’re ‘trusted’? Let’s talk about all the ways this could go wrong instead.
Public consultation shows ‘robust support’? Sounds like they only heard what they wanted. Many people I know are completely against a digital currency. 🤥👎
Israel’s move towards a digital shekel is inspiring! Looking forward to the new opportunities this will create. 🌟💳
Are we really ready for this kind of economic shift? Feels like there’s a lack of thorough planning and consideration for long-term consequences. 📉😤
Public support for the digital shekel is a game-changer. This could be a massive leap for Israels financial system!
BoI is setting an example for other nations with their proactive steps in digital currency development!
Innovation at its best! The digital shekel could bring revolutionary changes to Israel’s payment systems.
Decentralized finance and permissionless solutions offer genuine innovation, yet theyre excluded. This makes the digital shekel feel like a step backward.
The emphasis on privacy concerns shows BoI is taking a thoughtful approach to CBDCs. Way to go!
The Digital Shekel Challenge is a groundbreaking step for Israels fintech future! Cant wait to see the innovative solutions.
Love the idea of the Digital Shekel Challenge! Cant wait to see what brilliant solutions come out of this.
Government-backed digital currency could pressure traditional banks, but at what cost? Higher interest rates wont matter if our financial privacy is compromised.
The digital shekel backed by a trusted entity like BoI can boost confidence in digital currencies. Brilliant move!
Great to hear public sentiment is supportive of the digital shekel! Onward to a more advanced digital economy! 🚀💻
Fantastic news! The digital shekel initiative shows Israel is ready to lead in digital finance innovation. 🚀🇮🇱
I really don’t see how this benefits the average Israeli citizen. Sounds like it’s just another layer of complexity and bureaucracy. 🤔💩
The future of payments in Israel is looking incredibly exciting with the digital shekel initiative! Can’t wait to see the new tech emerge. 🌐💸