The Bank of Israel issued a document on an action plan that it could take to create its own CBDC. However, he established a series of conditions.
The Bank of Israel announced an action plan for the possible issuance of a digital shekel (SHAKED), despite the fact that a decision has not yet been made on whether the central bank intends to issue that cryptocurrency.
“The question of the circumstances in which it would be decided to issue a retail CBDC (central bank digital currency) is an important discussion complementary to the important work that is being done on commercial and technological specifications,” They explain from the body chaired by Amir Yaron.
The paper discusses the conditions that would allow or support a decision to issue a Bank of Israel digital currency at some point, and indicates a number of variables that may influence the Steering Committee’s recommendation. Among them is the issuance of a CBDC in the US, in the European Union or in “a significant number of developed economies”, something that they believe is “probable”.
However, from the Bank of Israel they warn that the increase in the use of stablecoins or other private means of payment in general use could harm the payment system and monetary transmission. “At the moment, there are no indications of a substantial adoption of stablecoins as a means of payment in Israel. However, the payment habits of the public could change rapidly, for example, in an issuance scenario by a major private sector entity, ”the central bank indicated.
On the other hand, the Bank of Israel has pointed out that, according to its data, there are still no signs that the use of cash is declining in the country, although they believe that it is “very likely” that it will do so in the future “with the growing adoption of payment applications and electronic means of payment in general”.
“Public payment habits may change more quickly than we expected. As a result, the public’s ability to transact using central bank money can rapidly decline. The public’s ability to use central bank money is important both to maintain public confidence in other means of payment, as they can always convert them into central bank money, and to maintain the ability of individuals and businesses to carry out transactions. minimizing the intervention of private entities”, they have added.
Likewise, experts from the Bank of Israel also point out as factors to take into account the degree of competition in the national payment system and future technological developments in the payment system.
Previously, The central banks of Israel, Norway and Sweden partnered with the Bank for International Settlements (BIS) to complete an exploration of how CBDCs can be used for international retail and remittance payments.
Source: Ambito
