Israel Boosts Development of Central Bank Digital Currency with the 'Digital Shekel Challenge'
Summary:
Israel is focusing on the swift development of its central bank digital currency (CBDC) - the digital shekel. The Bank of Israel (BoI) aims to create an advanced digital payments ecosystem with the help of service providers. To facilitate this, the BoI will initiate the "Digital Shekel Challenge," inspiring new, unique elements in the payments sector. Participants from the private, public, and academic sectors are invited to compete in designing real-time CBDC payment mechanisms for consumers. There are also plans to apply this to niche scenarios within Israel’s CBDC experiment.
Israel is focusing on the accelerated development of its own central bank digital currency (CBDC), christened the digital shekel. The Bank of Israel (BoI) intends to rally several service providers to cooperatively cultivate an innovative digital payments ecosystem centred around this digital shekel. Summarizing from the official announcement, the BoI stated it aims to catalyse the process of issuing the digital shekel by planning a "Digital Shekel Challenge", which draws inspiration from "Project Rosalind" conducted by the BIS Innovation Hub. The latter project is a cooperative experiment between the Bank for International Settlements (BIS) and the Bank of England, utilizing technology to design prototypes for an application programming interface. In this competition, the BoI will supply an experimental environment linked to application programming interfaces (APIs), with participants striving to construct real-time CBDC payment mechanisms for the common public. Shauli Rejwan, the managing partner at Masterkey Venture Capital in Tel Aviv, elaborated on the program, which includes stages of application, presentations, and access to the new network for chosen projects followed by a conclusive presentation to judges. He suggested that this could serve as a connecting pathway between the Web3 sector and governing bodies. Israel extended an invitation to representatives from the private, public, and academic sectors to participate in this experiment. The central bank stressed the need for unique, innovative elements in the payments realm. The experiment additionally allows participants to design solutions for specific niches and scenarios related to Israel’s CBDC. During a discussion on April 16, BoI deputy governor Andrew Abir advocated for CBDC competition with banks as advantageous for Israel’s economic growth. He was of the opinion that the public would support the development of a digital shekel. The deputy governor predicted that even the option of holding digital shekels could encourage banks to offer higher interest rates. A recent report on a public consultation indicated shared enthusiasm for continued exploration into the potential impacts of CBDC on the payments market, financial and monetary stability, and legal and technological issues. Despite unanimous backing, there were also concerns brought forth on potential privacy risks posed by CBDC.
Published At
5/29/2024 1:25:35 PM
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