Bank of Israel explores digital shekel with offline and cross-network payments

The latest report from the Israel Bank presents an “optimal” design of Digital Shekel, although the implementation will depend on collaboration with the legislators and stakeholders in the industry.

The bank of Israel has unveiled a preliminary design for digital shekel, but its launch will depend on new discussions with the government.

In the documentThe Israeli central bank explained that digital shekel is designed to be accessible to everyone, claiming that the currency controlled by the State “will be available for the whole public, including children, foreigners (including tourists), all types of businesses, public institutions and financial entities.”

“Similar to Cash, it will be a universal payment method – anyone can pay anyone, and anyone can receive payment from anyone, but with convenience and advancement of a digital means of payment.”

The Bank of Israel

It is assumed that companies would pay costs lower than existing options, although it is not clear what costs will be implemented. The central bank demands payments with the Central Bank digital cure would be fast, with support for offline payments.

Addressing confidentiality problems, the Bank of Israel has reassured that the level of privacy “will be higher compared to existing digital payments”.

“The level of confidentiality in the digital shekel will be higher compared to existing digital payments, and similar to Cash, it will also offer the possibility of anonymous payments in limited amounts.”

The Bank of Israel

The digital shekel could also integrate into other systems, allowing users to “receive or make payments in the digital shekel even if the other party to payment does not use the digital shekel”.

The Central Bank underlined that a final decision on the issue of Digital Shekel has not yet been made, noting that if future conditions show that the advantages prevail over costs and risks, the Israel Bank “will be prepared” to implement the “action plan”.

The Bank of Israel begin By examining the digital shekel in 2017, seeking the possible advantages and challenges of launching a CBDC. During the initial phase, they focused on the global trends in digital currencies, technology behind them and how they could affect monetary policy and financial stability. In 2021, the bank resumed things by forming a special team to dive more deeply in the development of digital shekel.