The Bank of Israel plans to make a decision regarding the introduction of a central bank digital currency (CBDC) based on the actions of the European Central Bank (ECB). Deputy Governor Andrew Abir mentioned that the ECB is likely to be the first Western central bank to implement a CBDC, which could prompt other countries, including Israel, to follow suit.
Recently, Israel’s central bank initiated the Digital Shekel Challenge as part of its preparations for a potential digital shekel issuance. While research on CBDC continues, no final decision has been made by the Bank of Israel regarding the issuance of a digital currency.
Currently, 134 countries or jurisdictions, representing a significant portion of global GDP, are exploring the possibilities of CBDC implementation. The European Union (EU) has also expressed a strong interest in developing its digital currency. Although the EU introduced legislation for a digital euro last year, it does not signify a confirmed commitment to launch one.
Deputy Governor Abir highlighted the importance of assessing public acceptance of a digital shekel through behavioral studies. Establishing compelling use cases is crucial for the successful adoption of a CBDC. Moreover, in a market dominated by a few major banks, introducing a digital currency could promote fair competition among payment providers and traditional banking institutions.
As the global landscape evolves with the growing interest in CBDCs, central banks worldwide are closely monitoring developments to determine the potential benefits and challenges associated with introducing digital currencies into their respective economies.