The Bank of Israel has decided to delay launching its digital shekel, opting to observe the European Central Bank’s developments with the digital euro first. Bank of Israel deputy governor Andrew Abir explained that Israel wants to see how the digital euro’s rollout impacts public adoption before making its own decision.
Israel began exploring the digital shekel in 2017, focusing on global trends, technological feasibility, and effects on monetary policy. In 2021, the Bank of Israel formed a task force to further investigate, and recently launched the Digital Shekel Challenge to test applications for a potential CBDC.
A unique feature of a CBDC is that payment providers would not hold customer funds, reducing credit exposure and lowering supervision requirements. This could level the playing field for payment providers against traditional financial lenders.
The strategic importance lies in carefully monitoring the digital euro’s impact, which could shape the future of Israel’s digital currency and payment landscape.
