The Bank of Israel has disclosed a preliminary plan for the digital shekel, outlining its technical framework, ecosystem, and regulatory measures.
While the bank has not finalized a plan for its issuance, it has shared a draft design proposal for the digital shekel (DS), which could function as the nation’s CBDC.
On March 3, the Bank of Israel’s Steering Committee issued a preliminary design for an internal CBDC, highlighting its ecosystem, functionality, technical setup, regulatory framework, and future developments.
The central bank’s committee previously identified six potential justifications for a digital shekel, including the establishment of a parallel payment system, cost efficiency, improved privacy, and government support in tackling the “black economy.”
In its newest publication, the bank outlined the potential benefits of CBDCs for the public.
“The DS is expected to offer a wide range of benefits to all segments of the population. It will be available to the entire public, including children, foreigners, all types of businesses, public institutions, and financial entities.”
The current proposal assigns the Bank of Israel as the exclusive CBDC issuer, while private-sector partners will onboard users, manage deposit conversions, and deliver advanced financial solutions.
The digital shekel will support offline transactions, connect with other payment and digital asset systems, and enable instant settlement of transactions. The report added:
“The DS will be interoperable with other payment systems, allowing users to receive or pay in digital shekel even if the other party to the payment does not use the digital shekel.”
Read also: This ally of Israel believes CBDC is a bad idea, vows not to launch one
To study and assess the functionalities needed for a digital shekel, the Bank of Israel launched the “Digital Shekel Challenge.”
Through this challenge, the bank aims to inspire businesses and technologists to display various real-world implementations of an in-house CBDC.
The bank will decide whether to launch an Israeli CBDC after 2026, based on thorough research, public feedback, and regulatory assessments.
Israeli authorities will accept feedback and ideas from citizens on the CBDC’s design until April 30, 2025.
To gain perspectives on CBDC integration, the central bank will solicit information from tech companies.
