The Bank of Israel has been working on the development of the digital shekel, the virtual version of its national currency.
In a recent report, the head of the project, Yoav Soffer stated that the team has been sounding out the opinion of stakeholders to determine the prospects and limitations of a central bank-backed digital currency such as the digital shekel.
According to Soffer, the Bank of Israel has increased allocation to the project, which is an indication that the bank is determined to make the project a reality that comes on stream in the near future.
Some Countries Already Have CBDCs
With some top economies targeting the roll-out of central bank backed digital currencies, the Bank of Israel is working assiduously to make its CBDC a reality. Two countries, the Barbados and Nigeria launched the virtual versions of their national currencies in 2021.
Speaking on the proposed digital currency, Soffer who is the project leader for the CBDC said,
Right now, we are increasing the resources devoted to the digital shekel project, both in terms of finances and people,” he said. “A digital shekel has great potential to increase competition and innovation within the payment industry.”
Sampling Opinion of Stakeholders
In the quest not to fall behind in its drive to develop a central bank-backed digital currency (CBDC), policy makers in Israel are sampling the views of stakeholders to determine the risks and limits of a national digital currency.
This was made known by the head of the digital project of Bank of Israel, Yoav Soffer. He said that knowing the opinion of stakeholders is an ongoing process, even though digital shekel is still in its developmental stage and no specific date has been fixed for the launch of the virtual currency.
He said that some of the challenges associated with the roll-out of the digital currency are assessing the impact of the currency on the banking system and determining the cost of the token.
The Shekel Built On The Ethereum Network
The virtual shekel is being developed on the Ethereum blockchain. The project team explains:
“We did a trial with Ethereum technology, not because we think that that’s necessarily the technology we’ll use, but because it was a technology that was available for us to get our hands dirty with, in order to understand its advantages and disadvantages.”
The increased interest of the central bank in the digital currency can be linked to an earlier attempt in 2018, when the bank set up a team to determine the viability of a digital shekel. The report submitted by the team at that time did not favor the development of a shekel-backed digital currency at that time.
However, with some top economies such as China, Japan, Sweden and France actively working on the development of CBDCs, it is obvious that many central banks are looking to take advantage of what virtual tokens offer.
More Funding For The Digital Shekel
Soffer highlighted the priority being given to the project by the Israeli central bank thus:
Right now, we are increasing the resources devoted to the digital shekel project, both in terms of finances and people,” he said. “A digital shekel has great potential to increase competition and innovation within the payment industry.”
According to some experts from the Bank of America, CBDCs would become increasingly trendy as more central banks strive to take advantage of its potentials to enhance their monetary policies.
