The Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel has outlined potential future plans for the currency as it revealed the preparation of an action plan for issuance.
This comes in spite of the fact that a decision has not yet been made as to whether the Bank intends on doing so.
It was revealed that the queries of the circumstances under which it would be decided to issue a retail CBDC is a complementary important discussion to the significant work being done on the business and technological specifications.
According to data, cash is still being utilised in Israel in a significant portion of the consumer transactions. However, it is probable that the use of cash as a means of payment will decline in the future, with the expanding adoption of payment applications and of electronic means of payment in general.
The group underlined that there needs to be significant justification for the implementation of a Digital Shekel, which the group believes is coming imminently as it bolsters efficiency in payments in the region.
Analysing the role of stablecoins, the group’s report stated: “Significant penetration of stablecoins or other private means of payment that would be broadly used might impair the payment system. A stablecoin that isn’t pegged to the shekel might also harm the monetary transmission.
“At this point, there are no signs of substantial adoption of stablecoins as means of payment in Israel. However, paying habits of the public might change rapidly, for instance in a scenario of an issuance by a major private sector entity.”