Israel’s Central Bank Experiments with Digital Shekel
Israel joins other countries in the quest for a central bank digital currency (CBDC) as it takes ample steps towards issuing one. The country’s central bank, the Bank of Israel, started testing a digital shekel to examine its prospects. However, the bank is yet to adopt it despite its experiment with the digital shekel. The possibility of a CBDC has been welcomed by different countries around the world with many of them at the verge of issuing one. China has already begun testing its digital Yuan in numerous cities around the country.
Andrew Abir, Deputy Governor of Israel’s central Bank made the announcement, further saying the country is still far behind in the quest for a digital Shekel. While speaking during a conference in the country, the deputy governor observed that with the latest development, the country’s chances of launching a CBDC is up by 50%, however, this will not happen anytime soon. Sometime ago, before his recent announcement, he had pegged the chance of launching the digital shekel at 20%.
According to reports, the Bank of Israel had been
deliberating on a CBDC for four years. Reports further indicated the central bank had been having notable talks on the frameworks to set up before the actual launch of the digital shekel. The Isreali government further released a research paper with calls for opinions from the public. Meanwhile, the Isreali government had been making plans behind the scenes since issuing that paper. The paper bordered on proposed frameworks, potential benefits and risks of a digital shekel.
Bank of England Considers Implications of Non-issuance
In another development, the Bank of England (BoE) had considered the implications of not issuing a CBDC in an official statement it released this month. The BoE expressed worry over what a non-issuance of a CBDC would cause for the Euro. According to the BoE, it said the Euro may lose its monetary sovereignty if a CBDC is not released soon enough. According to Christine Lagarde, President of the European Central Bank, she said the issuance of the digital Euro would take four years or more. Tom Mutton, Director of CBDC had implored the ECB not to issue a CBDC in a haste as they still had a long way to go.
Concerns Expressed by Financial Experts over CBDCs
Concerns have been raised over CBDCs with some respondents of a survey conducted by Morgan Stanley, saying they were worried about privacy. A few others had said they were bothered about security, offline usage, universality and additional costs. Financial experts have also highlighted cyberattacks as a potential risk for CBDCs. China dismissed claims that the digital Yuan would be used to spy on citizens. It had said the release of the digital Yuan was prompted by the numerous private payments enterprises springing up around the country. The call for CBDCs among various countries is certainly a calculated response to private cryptocurrencies following a myriad of regulations on the crypto space.
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