The Bank of Israel says it is preparing an action plan for the possible issuance of a central bank digital currency (CBDC), although no formal decision has yet been made.
On April 17, the Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel outlined possible scenarios for the development and deployment of a CBDC, a digital shekel called “SHAKED.”
He provided several scenarios that could lead to the issuance of a digital shekel, among them was increased stablecoin activity.
Increased adoption of stablecoins may “harm the payment system,” he noted, before adding that non-shekel stablecoins “could also harm monetary transmission.”
“At this point, there are no signs of substantial adoption of stablecoins as a means of payment in Israel. However, the payment habits of the public can change rapidly, for example, in an issuance scenario by a major private sector entity.
Another potential driver of CBDC development is a decline in the use of cash in Israel, the Committee noted. He said cash is still used in a significant part of consumer transactions in the country, but a change in the public’s payment habits may result in a change in the use of central bank fiat money.
The Bank of Israel does not want this scenario or for private entities to control payments, so a CBDC could be the solution.
The Bank of Israel has published a document outlining the conditions that would allow or support the decision to issue a digital shekel https://t.co/ALU4FEYUTh
…#Israel #Shekel #CBDC #DigitalCurrency #DineroDigital #DigitalPayments #CBDC #DigitalCurrencies #ShekelDigital pic.twitter.com/Jbe49i1VnR
— Digital Pound Foundation (@digitalpoundfdn) April 17, 2023
It also said that the issuance of a CBDC would be considered to “support competition in the payment system and in the financial system in the digital age.”
If the United States or the European Union issues a CBDC, this would also influence Israel’s decision to implement one, he stated.
The Bank of Israel Steering Committee concluded that it was monitoring the situation in preparation for the digital shekel advance.
Related: CBDC Will Be Used For ‘Control’, ECB President Admits In Video Chat With Fake Zelensky
Israel seems to be following the US in terms of crypto regulation. Earlier this year, the country’s securities regulator, the Israel Securities Authority (ISA), proposed legislation that would classify crypto assets as securities in the country.
Industry executives have raised concerns that it could “kill the industry.”
Feature: Unstable Currencies: Decoupling, Bank Runs, and Other Risks Loom
This post Israel’s central bank says CBDC could be issued if stablecoin usage increases
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