Bank of Israel Reveals Potential Digital Shekel Design for Public Consultation

The Bank of Israel has unveiled a high-level design for a potential digital shekel (DS) and is inviting public feedback on its proposed structure. While the central bank has been exploring the issuance of a central bank digital currency (CBDC) since 2017, no final decision has been made on its rollout. However, the publication of this proposed design marks a significant milestone in the country’s digital currency journey.

A Multi-Purpose Digital Currency for All

According to the Bank of Israel, the digital shekel would serve both retail and wholesale purposes, making it accessible to the entire public, including children, tourists, businesses, public institutions, and financial entities.

Much like physical cash, the DS would function as a universal payment method, allowing instant and final transactions between individuals, businesses, and institutions. The design also includes offline payment capabilities, ensuring accessibility even in the absence of internet connectivity.

The CBDC would be free for private users and offer lower transaction costs for businesses compared to existing digital payment solutions. Additionally, the private sector would be able to leverage the secure infrastructure of the Bank of Israel to develop innovative payment solutions, fostering a competitive and open financial ecosystem without the risk of monopolized “walled gardens.”

Interoperability and Enhanced Payment Flexibility

The proposed digital shekel would be designed for seamless interoperability with existing payment systems, enabling transactions where one party uses the digital shekel and the other utilizes a bank account or another payment method. This feature would enhance financial flexibility and adoption across various sectors.

Yoav Soffer, Digital Shekel Project Manager, emphasized the importance of public engagement and industry collaboration in refining the potential CBDC framework.

“The Bank of Israel has not yet decided whether to issue a digital shekel, but it is important for us to prepare and deepen our knowledge and understanding of each component of the digital shekel system together with the ecosystem,” Soffer stated.

As the Bank of Israel continues its assessment, the focus remains on ensuring financial inclusion, enhancing payment efficiency, and fostering innovation while maintaining a secure and adaptable digital payments landscape.