In August, it became known that Israel was considering issuing its own state cryptocurrency, the so-called Digital Shekel.
In this regard, however, an official study of the Bank of Israel has recently been published, which states that Digital Shekel is unsuitable for the needs of the country, recommending to the Central Bank itself not to issue any CBDC in the future.
CBDCs stands for Central Bank Digital Currency, i.e. digital currencies issued by a Central Bank: those that are improperly called “state cryptocurrencies”, such as the Venezuelan Petro.
The study began in December 2017, at the initiative of outgoing Bank of Israel (BoI) Governor Karnit Flug, to examine the pros and cons of issuing an Israeli CBDC for faster payments.
The study concluded with an explicit recommendation to the BoI not to issue a digital currency in the near future because it would be “necessary to continue examining the field and to follow developments around the world before there are proper grounds for a decision to recommend issuing digital currency”.
Therefore, the team that carried out the study will continue to work to analyze and monitor the problems, reporting every six months to the management of the BoI on any significant developments in the crypto sector.
In short, no Digital Shekel in Israel.
The study points out that although many central banks around the world are considering issuing digital money, no central bank in an advanced economy has yet done so.
In addition, there are still no uniform specifications for CBDCs and some difficulties and risks have been identified. First, the potential impact on the current financial system, but also on the central bank itself and the country’s payment system.