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Israel postpones CBDC launch
After successful pilots and collaboration with the Bank of International Settlements, BOI Deputy Governor Andrew Abir said it was waiting for a major Western central bank to launch before implementing Israel's CBDC.
After successful pilots and collaboration with the Bank of International Settlements, BOI Deputy Governor Andrew Abir said it was waiting for a major Western central bank to launch before implementing Israel's CBDC.
The Bank of Israel launched the challenge to explore the feasibility of issuing a digital shekel, inspired by the Bank for International Settlements and Bank of England’s Project Rosalind.
A digital shekel will force commercial lenders to up their game and offer better and cheaper services, according to the deputy governor of the Bank of Israel.
The Bank of Israel published a CBDC paper, which outlines a system in which CBDC wallets aren’t linked to banks and users can use a variety of PSPs.
The Bank for International Settlements has announced a successful CBDC proof of concept—Project Sela—prioritizing inclusivity and privacy, poised to revolutionize CBDC services.
The Bank of Israel laid out several initiatives to trigger mass adoption of its digital shekel, including using the CBDC to settle taxes and pay salaries.
Israel has decided against launching a digital shekel but remains open to its possible development, noting that global powers and the state of cash transactions could influence its future judgment.
Israel's proposed legislations in regulating stablecoins include restricting algorithmic stablecoins and uncollateralized assets, as well as "borrowing" the EU's MiCA to supplement local laws.
Retail CBDCs could solve cross-border friction, but Yaron admitted that several challenges remain, including enforcing AML rules and possibly pushing private operators out of business.
Shira Greenberg called for wider powers to be given to the supervisor of financial service providers and opined to create an effective tax regime for the industry.
Bank of Israel partnered with the Hong Kong Monetary Authority and the Bank for International Settlements to test the feasibility of a digital shekel for retail use.
The public said that a digital shekel would reduce reliance on cash and advance the fintech industry, but the BOI has still not decided whether it will issue the CBDC.