The Bank of Israel has been involved in the development of a Central Bank Digital Currency for some time now (CBDC). The project is nearing completion, with Deputy Governor Andrew Abir lately revealing that Israel has completed a pilot study.
The country’s supreme lender has embraced Ethereum Technology to operate an in-house trial of the digital Shekel, as per a report by Israeli financial daily Globes and as cited by Bloomberg. The major source for the publication, nonetheless, was not identified.
Since 2017, the idea of creating digital shekels has been discussed. Given the rapid growth of the digital economy and remittances, authorities have to speed up their study and preparedness for the digital currency.
Although the notion of releasing a CBDC was sound, some high-ranking officials questioned whether it could be implemented successfully. Abir expressed his optimistm about the debut of the digital Shekel.
“I had earlier calculated that there is a 20% probability of a CBDC in five years. My forecast has risen slightly in 2020, owing to the fact that other nations are making progress as well. However, there is a probability of less than 50%.”
The central bank’s deputy governor stated that Israel’s payment network lags other countries by at least ten years. The proliferation of framework to support contactless payments, as well as the inflow of digital wallets, has allowed them to narrow the gap. Abir remarked that the objective of any Central Bank launching a digital currency has little to do with Bitcoin when replying to the prevalent notion that a CBDC is designed to give security against Bitcoin. “Bitcoin is not a payment system, and it is not a currency. In the best situation, it is a financial asset, and in the worst case, it is a pyramid scam.”
CBDC, unlike cryptos, is based on distributed ledger technologies such as blockchain. As per PwC, attempts to create CBDC are gaining traction, with over 60 nations presently investigating or actively creating their digital currency. In some mainland locations, China has already started trial operations for the digital yuan.
The European Central Bank (ECB) has completed a public survey on digital Euros. The ECB’s president, Christine Largade, indicated that they will make a decision in mid-2021. The currency’s launch will take 4 years if choices are made to carry forward from there.
