Bank of Israel official confirms digital shekel plans

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The Deputy Governor of the Bank of Israel has confirmed pilots of its digital shekel are already underway, suggesting that a central bank digital currency rollout could proceed across the country over the coming months.

Andrew Abir said the bank had begun piloting the digital currency, though was keen to downplay suggestions that a wider launch was imminent, or that it was a foregone conclusion that the bank would issue a central bank digital currency to the public.

“I had previously estimated that the chance of having a CBDC within five years is 20%. My estimate has increased a bit in the last year, mainly because other countries are advancing with it too, but still there is less than a 50% chance.”

The bank has not formally announced plans to proceed with a rollout, but said it intended to prepare an action plan for exploring the potential benefits a CBDC could bring to the economy of Israel.

It said it would only back a launch of a digital currency where it could be demonstrated that the benefits “outweigh the costs and potential risks.” In particular, the central bank is thought to be looking at whether a CBDC can better meet the needs of its domestic economy, and whether it could help facilitate more streamlined cross-border trade.

“The option for a CBDC is still being examined, and when we made our statement last month, it was not to say what we are doing, but rather to share what we do not know and receive feedback from the public.”

Notably, Abir criticized BTC, which he said was an unsatisfactory means of payment, brandishing it a “pyramid scam.”

“What we are talking about is a payment system. Bitcoin (BTC) 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.”

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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