According to a report from the Jerusalem Post, Andrew Abir, a Bank of Israel deputy governor, confirmed the launch of an Israeli central bank digital currency, or CBDC, via a pilot test of the digital shekel.
Speaking at the Fair Value Forum by IDC Herzliya, the deputy governor admitted a pilot program for a digital shekel had been started.
Last month, the central bank told the media there was a plan to do this, and the bank was preparing to explore the benefits of a CBDC on the Israeli economy.
It also commented that it should develop a CBDC as the benefits “outweigh the costs and potential risks.”
The New Digital Shekel is in Pilot Test Phase
According to the central bank, a CBDC may be issued if it meets the needs of a future digital economy and provides more efficient cross-border payments.
By using a CBDC, the financial institution also hopes it could help to reduce the use of cash and ensure the public can make payments with “a certain level of privacy.”
Israel’s central bank started to explore the introduction of a CBDC four years ago by establishing an interdepartmental group tasked with exploring the subject.
In the past, the team stated, “no advanced economy has yet issued digital currency for broad use,” in recommending against the Bank of Israel issuing a digital currency.
Concerns Surround Launching a Full-Scale CBDC in Israel
Despite the deputy governor confirming a pilot test was underway, he was still apprehensive about the bank issuing a central bank digital currency.
In addition, he commented that he doesn’t see Bitcoin as a means of payment,
“What we are talking about is a payment system. Bitcoin is not a payment system, and it is not a currency. In the best situation, it is a financial asset, and in the worst case, it is a pyramid scam.”
Of course, this isn’t true. While Bitcoin is prohibited in some nations, it is commonly used as a means of payment.
