Bank of Israel issues preliminary digital shekel
The Bank of Israel has issued a preliminary proposal for the design of the digital shekel (DS), a potential digital currency of the Central Bank of Israel (CBDC), despite the lack of a clear intention to officially launch.
On March 3, the Steering Committee of the Bank of Israel released a preliminary design of the internal CBDC, in which it described the supporting ecosystem, functionality, technical design, regulatory considerations and next steps.
Earlier, the central bank committee identified six possible motives for issuing a digital shekel, including the creation of an alternative payment system and infrastructure, cost reduction, improved confidentiality and support for the government's fight against the "shadow economy", etc.
The latest report emphasizes that CBDCs can benefit the general public:
"DS is expected to offer a wide range of benefits to all segments of the population. It will be available to all segments of the population, including children, foreigners, all types of enterprises, state institutions and financial organizations".
According to the current plan, the Bank of Israel will be the sole issuer of CBDC, and private sector participants will help with connecting users, converting deposits and providing advanced financial services.
Key features of the digital shekel will also include offline functionality, compatibility with other payment systems and digital asset networks and instant payments.
"DS will be compatible with other payment systems, allowing users to receive or pay in digital shekels, even if the other payment party does not use a digital shekel," the report added.
As part of the process of studying and evaluating the necessary functions of the digital shekel, the Bank of Israel has released the "Digital Shekel Challenge". The challenge calls on technologists and businesses to demonstrate various real-world use cases for internal CBDC.
The final decision to launch an Israeli CBDC will be made after 2026 based on research, public feedback and regulatory considerations.
Israel will collect public feedback and proposals for the development of CBDC until April 30, 2025. The Central Bank will also send information requests to technology providers to get ideas for the implementation of CBDC.