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May 9, 2022 8:48 am

Bank of Israel Still Unsure on Digital Shekel but Garners Public Support

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avatar by Reuters and Algemeiner Staff

Bank of Israel Governor Amir Yaron gestures while he speaks during his interview with Reuters in Jerusalem, June 16, 2020. Photo: REUTERS/Ronen Zvulun.

Israel’s central bank said on Monday it had received public support for its plans to possibly issue a digital shekel on grounds it would help the economy by supporting innovation in the payments system, reducing the amount of cash and bolstering the fintech sector.

The Bank of Israel last November stepped up its research and preparation for the possible issuance of a digital shekel to create a more efficient payments system after first considering issuing a central bank digital currency in late 2017.

In March, it said a digital shekel was unlikely to significantly erode the banking system’s business results.

It has called on the public to weigh in, and on Monday it said it had received 33 responses from various sectors, half of them from abroad. Some 17 replies came from the fintech sector.

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“The Bank of Israel has still not made a final decision on whether it will issue a digital shekel,” the central bank said.

“But all of the responses to the public consultation indicate support for continued research regarding the various implications on the payments market, financial and monetary stability, legal and technological issues, and more,” it said in a report.

Some other central banks are also considering the possibility of issuing digital currencies.

Respondents believe a digital shekel should encourage competition in the payments market, while there was a split on privacy issues, the central bank said. Some want full anonymity like cash, while others believe a digital shekel should be subject to money laundering rules and helping the war on the “black economy.”

A digital shekel should also come at a zero or low costs to business owners and consumers and be easy to use for all, including the elderly.

“The Bank is committed to openness and transparency in its continued research regarding the digital shekel, and expects to continue fruitful dialogue with all interested parties at all stages of research and development in the digital shekel project,” the central bank said.

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