The Bank of Israel has released an initial design proposal for Digital Shekel (DS), the potential central bank of Israel’s digital currency (CBDC), despite the unstable intent for an official launch.
On March 3, the Bank of Israel operation committee Issued An initial design for an in-house CBDC-that outlines the support of the ecosystem, functionality, technical design, regulatory considerations and next steps.
The central bank committee had earlier identified six possible motivations for the release of a digital cycle, which included the creation of an alternative payment system of payment and infrastructure, decreased costs, improving privacy and supporting the government’s battle against the “black economy,” among others.
Digital Shekel and other types of currency in the economy. Source: Bank of Israel
In the latest report, it featured that CBDCs could also benefit from the general public:
“DS is expected to offer a wide range of benefits to all segments of the population. It is available to the public, including children, foreigners, all kinds of businesses, public institutions, and financial creatures.”
Involving the participation of private companies
According to the current plan, the Bank of Israel will be the only CBDC provider, and private sector participants will help the user onboarding, converting deposits and providing advanced financial services.
The main features of the digital shekel will also include offline functioning, interoperability with other payment systems and digital assets, and instant organizations. Report added:
“The DS is interrelated with other payment systems, allowing users to receive or pay in digital shekel even if the other payment party does not use digital shekel.”
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Collecting comment on CBDC design
As part of the process to evaluate and evaluate the required operations of a digital cycle, the Bank of Israel has released a “digital shekel challenge.” The challenge encourages technologists and businesses to present various real-world use cases for an in-house CBDC.
The final decision – whether an Israeli CBDC will be launched – will be made after 2026, based on research, public feedback, and regulation considerations.
Israel collects public feedback and suggestions on CBDC designing until April 30, 2025. The Central Bank will also send requests for information (RFIS) to technology providers to obtain CBDC implementation ideas.
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