Bank of Israel opens consultation on potential digital shekel

The Bank of Israel has opened a public consultation on the potential issuance of a digital shekel.

A steering committee set up by the bank has issued a report that outlines the potential benefits, issues to examine and a draft model for a digital currency, as well as a public call for responses.

The draft model envisions a two-tier framework where the central bank will offer digital shekels to private-sector payment providers who would subsequently act as the interface to the general public.

The bank aims to provide a minimal amount of infrastructure using either centralised ledgers or distributed ledger technologies and leave it to private sector firms to compete on innovation.

The central bank stated, “The draft model is the basis for a discussion and for examination of alternatives by the work teams involved in the matter at the Bank of Israel. Following the publication of this document, it will also serve as the basis for discussion within the professional community in Israel regarding the necessary characteristics of a digital shekel.”

The bank’s consultation will close on 31 July this year, with the findings to be published at a later date.

Israel is not the first country to take a look into establishing a national digital currency. Recently, UK Chancellor of the Exchequer Rishi Sunak told the Bank of England to look at the case for a potential ‘Britcoin’ or central-bank-backed digital currency.

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