Bank of Israel explores digital shekel with offline and cross-network payments
The Bank of Israel’s latest report presents an “optimal” digital shekel design, though implementation will depend on collaboration with lawmakers and industry stakeholders.
The Bank of Israel has unveiled a preliminary design for the digital shekel, but its launch will depend on further discussions with the government.
In the document, Israel’s central bank explained that the digital shekel is designed to be accessible to all, saying the state-controlled currency “will be available to the entire public, including children, foreigners (including tourists), all types of businesses, public institutions, and financial entities.”
“Similar to cash, it will be a universal means of payment – anyone will be able to pay anyone, and anyone will be able to receive payment from anyone, but with the convenience and advancement of a digital means of payment.”
The Bank of Israel
It’s assumed that businesses would pay lower costs than existing options, though it’s unclear what fees will be implemented. The central bank claims payments with the central bank digital currency would be fast, with support for offline payments.
Addressing privacy concerns, the Bank of Israel reassured that the level of privacy “will be higher compared to existing digital payments.”
“The level of privacy in the digital shekel will be higher compared to existing digital payments, and similar to cash, it will also offer the possibility of anonymous payments in limited amounts.”
The Bank of Israel
The digital shekel could also integrate with other systems, enabling users to “receive or make payments in the digital shekel even if the other party to the payment does not use the digital shekel.”
The central bank emphasized that a final decision on issuing the digital shekel hasn’t been made yet, noting that if future conditions show the benefits outweigh the costs and risks, the Bank of Israel “will be prepared” to implement the “action plan.”
The Bank of Israel started looking into the digital shekel in 2017, researching the possible benefits and challenges of launching a CBDC. During the initial phase, they focused on global trends in digital currencies, the technology behind them, and how they could affect monetary policy and financial stability. In 2021, the Bank took things up a notch by forming a special team to dive deeper into developing the digital shekel.
