- BOI outlined the potential for developing a digital shekel.
- Bank of Israel started taking the CBDC project into consideration in 2017.
The widespread use of the stablecoin scenario led to Israel’s central bank keeping an eye on Central Bank Digital Currency (CBDC) development. The Bank of Israel (BOI) says it is creating an action plan for the potential issuance of a CBDC, a “Digital Shekel known as SHAKED.”
But the report released on April 17 by the steering committee for the Bank of Israel’s consideration of the potential issuance of a digital shekel made it clear that the regulator has not made a final decision on whether to issue a CBDC.
Israel’s Steps Towards CBDC Initiative
Despite the widespread belief that a digital shekel would foster competition in the payment system. However, a 21-page paper outlining the scenarios noted that while 90% of central banks worldwide are looking into CBDCs, very few have gone as far as issuing them.
The Central Bank of Israel started taking the CBDC project into consideration at the end of 2017. But in May 2021, the Bank of Israel made the decision to resume it after a year of investigation and suggested that it be suspended for the time being.
Further, in November 2021, it made an announcement about accelerating its research. And the Bank of Israel stated in March 2022 that it did not see a risk of “erosion” to its banking system in relation to a potential digital shekel. Finally, the country is about to begin CBDC circulation.
The central bank’s decision to issue “SHAKED” could also be influenced by a decline in the use of cash, significant stablecoin adoption, and significant technological advancements in payment systems. Also, the Bank of Israel disagrees with the country’s digital payment system being taken over by private companies.
Moreover, significant stablecoins such as Tether (USDT), USD Coin (USDC), Binance USD (BUSD), and TrueUSD (TUSD) never missed attracting the crypto community with their use cases.