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- BOI detailed the possibilities for creating a digital shekel.
- The Bank of Israel began considering the CBDC initiative in 2017.
The extensive adoption of stablecoins has prompted Israel’s central bank to monitor the development of Central Bank Digital Currency (CBDC). The Bank of Israel (BOI) indicates that it is formulating a strategy for the potential launch of a CBDC, referred to as the “Digital Shekel” or SHAKED.
However, the report published on April 17 by the steering committee regarding the potential issuance of a digital shekel clarified that the regulator has yet to reach a conclusive decision on whether to proceed with a CBDC.
Israel’s Progress on CBDC Initiative
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There is a prevalent belief that a digital shekel would enhance competition within the payment ecosystem. Nonetheless, a 21-page document outlining various scenarios highlighted that while 90% of central banks globally are exploring CBDCs, only a limited number have advanced to the stage of issuing them.
The Central Bank of Israel began considering the CBDC project towards the end of 2017. However, in May 2021, the Bank of Israel opted to resume its efforts after a year of examination, suggesting a temporary suspension of the initiative.
Additionally, in November 2021, it announced plans to expedite its research. The Bank of Israel stated in March 2022 that it did not perceive a risk of “erosion” to its banking system concerning a potential digital shekel. Ultimately, the nation is poised to initiate CBDC circulation.
The central bank’s choice to issue “SHAKED” may also be swayed by a reduction in cash usage, notable stablecoin adoption, and significant advancements in payment technologies. Furthermore, the Bank of Israel opposes the notion of the country’s digital payment system being dominated by private entities.
Moreover, prominent stablecoins such as Tether (USDT), USD Coin (USDC), Binance USD (BUSD), and TrueUSD (TUSD) have consistently captured the interest of the crypto community with their applications.
