Israel has already tested a digital shekel cryptocurrency – .

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Israel has already tested a digital shekel cryptocurrency – .


Israel has already piloted a digital shekel cryptocurrency, Bank of Israel Deputy Governor Andrew Abir said, perhaps inadvertently, at a recent Fair Value Forum conference. ‘IDC Herzliya.

Towards the end of a panel discussion, Abir said the Bank of Israel had already started a digital currency pilot project. Another panel member looked surprised and asked, “Have you ever issued a coin? Abir replied in the affirmative.

However, Abir said he was not optimistic about the launch of such a central bank digital currency (CBDC).

“I had previously estimated that the chance of having a CBDC within five years was 20%,” said Abir. “My estimate has gone up a bit last year, mainly because other countries are also making progress. But there is still less than 50% chance.

In May, the Bank of Israel said it was preparing an action plan on how it could offer a digital currency. The concept of issuing such a currency has been under discussion since 2017, but it has decided to accelerate its research and preparation for the potential issuance “in view of the rapid developments in the digital economy and payments, and at seen from the big central banks. “Work on the issue. “

A CBDC would rely on distributed ledger technologies such as blockchain, but it would be different from the cryptocurrencies that are popular today, including bitcoin. The most important difference is that although cryptocurrencies do not belong to any specific country and some are characterized by the absence of a central authority to manage them, a CBDC issued by a country’s central bank would be. regulated by the competent state authorities.

“The option of a CBDC is still under consideration, and when we made our statement last month, it wasn’t to say what we do, but rather to share what we don’t know and receive. public comment, ”Abir said.

In recent years, there have been significant and very rapid changes in the payments market in Israel and abroad. Although no central bank in an advanced economy has yet announced its decision to launch a project that would lead to its issuance of a digital currency, there has recently been an apparent shift in global sentiment on the matter, and central banks in a number of major global economies have begun to explore the possibility of issuing a CBDC alongside existing means of payment.

The Bank of Israel is very keen on staying on top of emerging global trends, Abir said.

“The payments system in Israel is at least a decade behind other countries,” he said. “But over the past year, we’ve started to bridge the gap with the distribution infrastructure that enables contactless payments and digital wallet entry.

“We’re in the middle of a disruptive technology process, and we don’t know who the winners will be. Will it be banks, credit card companies, fintechs, or big tech companies? There will be changes in the next few years that we do not yet know. But it is clear that the environment in five years will not be the same as it is today.

Abir downplayed common expectations for a digital currency.

“I’m sorry to tell you this, but this is not going to eliminate the banks,” he said. “No central bank will introduce digital currency for this purpose. Banks will always have an important part in the whole payment system.

“Another thing that might disappoint you is that any digital currency from a central bank would not be designed as some sort of bitcoin hedge. What we are talking about is a payment system. Bitcoin is not a payment system, and it is not a currency. At best, it’s a financial asset, and at worst, it’s a pyramid scam, ”Abir said.

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