Israel has made a significant announcement regarding its plans to introduce a central bank digital currency (CBDC), known as the digital shekel. The Bank of Israel has outlined its next steps for developing the CBDC in a statement released on May 29.
The Bank of Israel has been considering the possibility of issuing a digital shekel for several years. As part of its action plan, the institution has introduced the “Digital Shekel Challenge.” This challenge invites entities from the private, public, and academic sectors to explore the potential uses of the digital shekel system. Participants in the challenge will be asked to develop different usage scenarios for the digital shekel using the API layer.
To support the development of the digital shekel system, the Bank of Israel will construct a technological prototype at its premises. This prototype will simulate the core of the digital shekel system and its API layer. Payment service providers and other stakeholders will have access to the system, allowing them to develop and offer advanced digital shekel payment options to the general public.
Deputy Governor of the Bank of Israel, Andrew Abir, commented on the importance of the digital shekel challenge in shaping the future of payment methods. He emphasized the need for cooperation between the Bank of Israel, private sectors, and government sectors to ensure the success of the digital shekel. The challenge aims to facilitate practical collaboration among various stakeholders in the payments system, both from Israel and abroad.
The Bank of Israel has stated that priority will be given to projects that introduce original and innovative features to the world of payments. This includes improvements to existing applications as well as the development of completely new applications. An expert committee will evaluate and rank the pending projects, which will be presented at a conference organized by the Bank of Israel at the end of the process.
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