By George Ward
Israel’s central bank, the Bank of Israel, has recently released a report outlining multiple scenarios for issuing a digital version of the country’s national digital currency, the shekel. While the report clarifies that no decision has been made, it represents a significant step in the ongoing global central bank digital currencies (CBDCs) debate.
Bank of Israel Considers Digital Shekel Amidst Stablecoins’ Rising Popularity
The Bank of Israel closely monitors various situations that could affect its choice to release a digital version of the shekel following the widespread adoption of stablecoins. In a recent report, the steering committee considered the possibility of a central bank digital currency (CBDC) and emphasized that it has yet to decide to issue a digital shekel.
The report, which spans 21 pages, described different scenarios and pointed out that while many central banks worldwide are exploring central bank digital currencies, only a few have progressed to releasing them. The report added that a digital shekel would be an electronic currency issued and backed by the central bank.
Unlike cryptocurrencies such as Bitcoin, which are decentralized and not approved by any central authority, the Bank of Israel would fully regulate the digital shekel. This would give users greater trust and confidence and make it easier for the central bank to control the money supply.
CBDC: Will Israel’s Shekel Be The Next To Go Digital?
Many countries are exploring issuing digital versions of their national currency. China, the United States, and the European Union are notable among such countries.
The potential benefits and risks of CBDCs are still being debated within the crypto community. But many still agree that they have the potential to impact the way people use them significantly and think about money.
Previously, the Bank for International Settlements (BIS) collaborated with the central banks of Norway, Israel, and Sweden to study the potential application of central bank digital currencies (CBDCs) in retail and remittance payments at an international level. Possible scenarios that could impact the decision to introduce a digital version of the Israeli fiat currency, the shekel, involve the U.S. or the European Union’s potential issuance of central bank digital currencies (CBDCs).
Other factors that could affect such a decision include a decrease in the use of cash and the growing adoption of stablecoins. Also, technological advances and increased competition in the local payment market are crucial determinants.
These circumstances could influence the central bank’s assessment and determination to issue a digital shekel. Per the statement, the Bank of Israel must be ready for a digital shekel if the circumstances validate the decision.
Ultimately, the Bank of Israel’s report on the digital shekel represents a significant development in the ongoing discussion about central bank digital currencies. While there are still many unanswered questions and concerns, the fact that central banks are exploring this possibility indicates that the future of money is likely to be digital.
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