Bank of Israel Official Reveals an Upcoming CBDC Pilot

Bank of Israel Official Reveals an Upcoming CBDC Pilot

Even if you’re not interested in the subject of cryptocurrencies, I’m sure you’ve heard of bitcoin, as the digital coin has become a household name and even a verb. Now, it appears there’s a new cryptocurrency at the center of the world’s attention.

A new post on the CBDC has been published on the WhatIsBitCotd blog. The post is written by the Deputy Governor of the Bank of Israel, Eyal Perry.

The Bank of Israel has officially announced that it will be introducing a CBDC pilot in 2018. According to the announcement, the CBDC will be a reserve currency that is used for settling transactions across the country’s payment system.

Bank of Israel Official Reveals an Upcoming CBDC Pilot

  • Andrew Abir, Deputy Governor of the Central Bank of Israel, recently announced the launch of a CBDC pilot project.
  • He clarified that this does not mean that CBDC will be implemented – the Bank is only exploring the idea and conducting tests.
  • The launch of the coin will depend on a number of factors, and they are not yet sure how they will proceed.

Central banks around the world continue their efforts to research, create and even launch their own cryptocurrencies, known as CBDCs (Central Bank Digital Currencies). The latest, however, seems to be the Central Bank of Israel, whose deputy governor has just confirmed the establishment of a pilot digital shekel.

According to Deputy Governor Andrew Abir, the bank has already released the CBDC as part of a pilot project. Abir, personally, is not optimistic about this idea.

At the IDC Herzliya Fair Value Forum conference, he even said that he does not expect the CBDC to be released, although it is a trial.

The subject of cryptocurrencies is still very controversial in Israel

Israel has been interested in cryptocurrencies for several years. In late 2020, the country required cryptocurrency users to report their coins to the country’s tax authority, the ITA. The measure comes just months after a proposal was made to exempt bitcoin from tax.

However, there are clearly concerns about the use of cryptocurrencies, especially after some reports showed that Hamas used cryptocurrencies to circumvent anti-terrorism sanctions.

Against this backdrop, it is understandable why attitudes towards cryptocurrencies are open to debate and why some will be more or less enthusiastic about a new cryptocurrency launched by the country’s own central bank.

Abir admitted that his initial assessment was that the country had a 20% chance of establishing a CBDC within five years. This estimate has increased over the past year, mainly because many other countries have announced their own CBDCs and made significant progress in developing them. However, he estimates that the probability of Israel following suit is less than 50%.

Israeli CBDC launch still uncertain

However, the timetable for the central bank remains completely unknown, even as a pilot version of the CBDC has been unveiled. The bank has not made any official statement on the possible issuance of the currency, but on the other hand, it has not said that it does not intend to introduce it.

He said only that he was preparing an action plan to explore the potential benefits of the digital shekel to the country’s economy. She stated that she would respond to these findings. So if the benefits outweigh the risks, it could consider implementing CBDC. Of course, benefits are not the only elements that can determine whether a coin is released. Another factor is whether there is a real need for the currency to secure the future of the country’s economy, whether it can allow for more efficient and secure international payments, etc.

However, the bank seems to want to reduce the population’s dependence on cash. She has also indicated that she wants to bring more privacy to payments. She emphasized that the idea is still under consideration and that the earlier statements were not made to inform the public of what the bank is doing, but to talk about a possible option in hopes of getting feedback.

The Deputy Governor also assured the country’s banks that they will continue to play an important role even if the CBCD is introduced, suggesting that it will not eliminate the need for banking institutions. But while he is relatively open to the idea of CBDC, he remains an outspoken critic of using bitcoin as a means of payment.Recently, the Bank of Israel’s head of research, Dr. Itzhak Be’er, stated that the bank is currently testing two different coins for its central bank digital currency program.. Read more about crypto regulation and let us know what you think.

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