The Bank of Israel has unveiled a preliminary design for the digital shekel, outlining its potential features, including offline transactions and cross-network interoperability. However, the final decision on launching the digital currency remains contingent on further discussions with lawmakers and industry stakeholders.
A Universal Digital Payment Solution
According to the Bank of Israel’s latest report, the digital shekel is designed to be accessible to all, ensuring that it can be used by individuals, businesses, public institutions, and even foreign visitors.
“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.” – Bank of Israel
While the report suggests that businesses may benefit from lower transaction costs, the exact fee structure remains unclear. Additionally, the central bank emphasized that payments using the digital shekel would be fast and efficient, with support for offline payments to ensure usability in various scenarios.
Privacy and Cross-Network Transactions
To address privacy concerns, the Bank of Israel stated that the digital shekel would offer a higher level of privacy compared to existing digital payment systems. It would also enable anonymous transactions in limited amounts, similar to the privacy associated with cash payments.
Furthermore, the digital shekel is expected to integrate with other financial systems, allowing users to send and receive payments even if the counterparty does not use the digital shekel.
Implementation Still Under Review
Despite these advancements, the Bank of Israel has not yet committed to issuing the digital shekel. The institution clarified that it will only proceed if future conditions demonstrate that the benefits outweigh the costs and risks.
The central bank has been researching central bank digital currencies (CBDCs) since 2017, analyzing global trends, technological advancements, and potential economic impacts. In 2021, the bank formed a dedicated team to explore the feasibility of the digital shekel, further deepening its research and development efforts.
As discussions continue, the Bank of Israel remains prepared to move forward with its digital currency action plan, should the right conditions arise for its implementation.
