On April 17, 2023, the Bank of Israel Steering Committee addressed the potential issuance of Digital Shekel and started preparing the action plan for the issuance of Central Bank Digital Currency and all the possible scenarios for developing and deploying a digital shekel called “SHAKED”. In no case does, the Bank of Israel want private companies to take over the digital payments system in the country.
So far there are no signs of substantial adoption of Stablecoin as a payment mechanism in the country. Yet it is believed that the paying habits of the citizens might change rapidly in the country. Alongside this, the declining use of cash in Israel is also considered a potential driver for the development of CBDC too.
Since the Bank of Israel does not want private entities to control the payments, therefore it would issue its own Central Bank Digital Currency if the adoption of the Stablecoin becomes substantial in the country. The committee also believes that the issuance of CBDC would support the competition in the payments system and financial system in the digital ecosystem. Thus, the steering committee of the Bank of Israel concludes plans to monitor the situation in the process of preparing the digital Shekel.
It was also stated that if the United States or European Union issues CBDC it would also influence the decision of Israel to deploy one. Thus, Israel appears to shadow the United States when it’s to crypto regulations. However, industry executives have expressed concern stating that such an approach would kill the industry.
