The Bank of Israel has released a preliminary design for the digital shekel, its potential central bank digital currency (CBDC), with no intent for an official launch.
Background of CBDC Development
On March 3, the Bank of Israel’s Steering Committee issued an initial design for a CBDC, outlining its ecosystem, functionality, technical design, regulatory considerations, and next steps. Six motivations for issuing a digital shekel include creating an alternative payment system, lowering costs, improving privacy, and supporting the fight against the 'black economy.'
Private Sector Initiatives
According to the current plan, the Bank of Israel will be the sole issuer of the digital currency, with private firms assisting in user onboarding, converting deposits, and providing advanced financial services. Key features include offline functionality, interoperability with other payment systems, and instant settlements.
Feedback Collection and Next Steps
To study and evaluate necessary functionalities of the digital shekel, the Bank of Israel launched the 'Digital Shekel Challenge,' encouraging demonstrations of real-world CBDC use cases. The decision to launch an Israeli CBDC will be made post-2026 based on research, public feedback, and regulatory considerations.
The Bank of Israel continues to collect public feedback on the CBDC design until April 30, 2025, and plans to send RFIs to technology providers for CBDC implementation ideas.
