The Bank of Israel has revealed an initial design for its proposed digital shekel, emphasizing accessibility, security, and efficiency.
However, the central Bank has clarified that the final decision on launching the digital currency remains uncertain and will depend on collaboration with lawmakers and industry stakeholders.
According to the Central Bank’s latest report, the digital shekel aims to serve as a widely accessible state-controlled currency. It is designed to be available to all individuals and entities, including children, tourists, businesses, financial institutions, and public organizations.
“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 report stated.
While the Bank of Israel expects businesses to benefit from lower transaction costs than existing payment solutions, specific fee structures have yet to be determined. The digital shekel is also expected to facilitate faster transactions, with support for offline payments, ensuring usability even in areas with limited internet access.
The central Bank addressed financial privacy concerns regarding the digital shekel, stating it would provide a higher level of confidentiality than current digital payment methods. It will offer the possibility of anonymous payments in limited amounts, similar to cash.
The proposed digital shekel features interoperability, allowing transactions even if the other party isn’t using the digital currency. However, the Bank of Israel emphasized that a final decision on its introduction will rely on further analysis to ensure benefits outweigh potential risks before implementation.
Meanwhile, The Bank of Israel also announced an open challenge to foster innovative use cases for the digital shekel. Dubbed the “Digital Shekel Challenge,” the initiative was inspired by the BIS Innovation Center’s “Rosalind Project”. It formed part of the Bank’s broader efforts to assess the feasibility of a central bank digital currency (CBDC).
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