Israel's central bank tests digital shekel, paving the way for a cashless future
At the recent "Engines of the Israeli Ecosystem" conference on April 16, Andrew Abir, Deputy Governor of the Bank of Israel, discussed the declining use of cash due to advancements in digital payment technologies.
He noted that cash used to be a primary payment method but has lost ground in the digital age.
Abir introduced a new sandbox project for the digital shekel, a potential central bank digital currency (CBDC).
This platform will allow financial institutions and tech companies to develop and test uses for this digital currency.
He emphasized that CBDCs could rejuvenate competition within the financial sector by enabling transactions more compatible with digital and e-commerce systems than traditional cash.
The digital shekel, in particular, could provide a framework for various financial services to innovate and compete.
The Bank of Israel is using the sandbox to explore the feasibility of the digital shekel but has not committed to officially launching it.
The decision to move forward will depend on future potential risks and benefits evaluations.
Previously, the bank had undertaken projects like "Project Sela" and "Project Icebreaker," which explored the technical and practical aspects of CBDCs in domestic and international contexts, respectively.
In summary, while the digital shekel promises to modernize Israel's financial services, its future will hinge on thorough testing and careful consideration of its broader impacts.
