Israel’s Central Bank Explores Possibilities of Issuing a Virtual Currency

Israel’s Central Bank is keeping a close eye on various scenarios that could impact its decision to issue a digital shekel (SHAKED).

These scenarios include the widespread adoption of stablecoins and a decline in the use of cash, as well as significant technological developments in payment systems and competition in the domestic payment system.

The Bank of Israel’s steering committee on the potential issuance of a digital shekel emphasized in a recent report that it has not yet decided to issue a central bank digital currency (CBDC). While 90% of the world’s central banks are examining CBDCs, only a few have advanced to the point of issuance.

The Bank of Israel collaborated with the central banks of Norway and Sweden, along with the Bank for International Settlements (BIS), to explore how CBDCs can be used for international retail and remittance payments.

The 21-page paper outlining potential scenarios for the digital shekel also noted that a decision by the U.S. or the European Union to issue CBDCs could influence the Bank of Israel’s decision.

In light of these potential scenarios, the Bank of Israel must be prepared to advance the issuance of a digital shekel if the variables listed above support it.

By keeping a close eye on developments in the payments landscape, the Bank of Israel is taking a proactive approach to ensuring that it can adapt to the changing needs of its citizens and businesses.