CBDC: Israel to Introduce Digital Shekel With Interest Benefits
The Bank of Israel has announced its support for the development of a new digital currency called the Israeli shekel central bank digital currency (CBDC), which offers the option of accruing interest.
Outlined in a statement on March 11, the Bank of Israel described the shekel CBDC’s implementation as a two-tier model. This model promises features such as instant, round-the-clock payments, support for multiple transactions, offline usability, balance limitations, and the potential for interest accrual.
The central bank emphasized its commitment to privacy, stating that while it will oversee the system’s operation, control, and monitoring, it will not have access to personally identifiable information regarding users’ balances and transactions.
Currently, commercial banks in Israel offer a 4.86% interest rate on fiat shekel deposits and savings. Under the central bank’s proposed framework, banks could include the shekel CBDC in their short-term liquidity reserves, although this would not generate interest.
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Experts involved in the project highlighted the importance of the data structure, emphasizing its role in ensuring compliance with regulations and the implementation of interest rates. They noted the advantage of a centralized database, particularly in scenarios where interest rates vary based on user types and account balances.
Israel has been considering the introduction of a digital shekel since 2021, although no concrete pilot tests have been initiated yet. The Bank of Israel stressed that decisions regarding the digital shekel system are subject to ongoing evaluation due to its complex nature.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
