Jul 11, 2024 12:25
Bank of Israel (BOI) has postponed the launch ofthe digital shekel until the European Central Bank (ECB) unveils its digitaleuro, Reuters reported. BOI will wait for major Western central banks to takethe first step in adopting central bank digital currencies (CBDCs).
Digital Shekel Debut
BOI's Deputy Governor Andrew Abir told the mediapublication: "We are all waiting for the first western central bank topull the trigger, which is almost certainly going to be the ECB. And then youmay see a rush of countries going forward with it."
As of March, 134 countries, encompassing 98% of theglobal economy, are exploring digital versions of their currencies. China leadswith advanced pilot programs, while the US Federal Reserve lags behind. TheBank of Israel initiated its exploration into CBDCs in 2017, aiming to enhanceits payments system.
The BOI's interest in a digital shekel intensified inNovember 2020. Collaborating with central banks from Hong Kong, Sweden, Norway,and the Bank for International Settlements. BOI has been testing its digital currency in an initiative termed the "Digital ShekelChallenge," which invites fintech and traditional financial companies toshowcase potential use cases.
Despite these efforts, the BOI is uncertain about theeventual launch of a digital shekel. The current experiment serves as an"action plan" to be implemented when deemed necessary andappropriate.
The ECB shares similar hesitations, with the potentialintroduction of a digital euro still uncertain. Europe's dependence oncross-border payment services from US giants like Visa and Mastercard adds tothe complexity.
Public Adoption Uncertainty
Abir highlighted the challenge of public adoption,stating that the concern is whether the public will adopt a digital currency.The BOI is conducting a behavioral study to understand the public willingnessto embrace a digital shekel.
Abir pointed out the gap between theoretical studiesand practical usage. He said that some studies are pushing people to use digital currency. However, he maintains that there should bea good set of use cases.
As the BOI waits for the ECB's move, the globalfinancial community remains keenly interested in how digital currencies willreshape economies and payment systems. The success of the digital euro couldpave the way for Israel's digital shekel and potentially revolutionize globalfinancial transactions.
This article was written by Jared Kirui at www.financemagnates.com.
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