Israeli Central Bank has allowed a sneak peek into the future form of its digitalized native cryptocurrency, Shekel through an ad hoc model. As per the ad hoc model of Israel’s CBDC, the users would not only be able to settle payments online and offline through Shekel but also exchange it for acquiring fiat currency.
Bank of Israel (BOI) is all set to participate in the 100-meter race for developing its very own Central Bank Digital Coin (CBDC). BOI had a long time showed its intent to launch the CBDC but said that it has to first evaluate the possibility. It took more than 3 years now for the BOI to come and make a statement showing its unchanged commitment towards crypto.
Various central banks of several countries are also working on the same project. Some of them have also successfully launched their CBDCs. However, some are currently testing while the majority of projects are still in progress. The most notable CBDC of the world is that of China i.e. digital Yuan. For digital Yuan’s nationwide adoption, Chinse Governmental authorities have also shut down operations of the majority of cryptocurrencies and crypto exchanges as well. Their idea is that if there will be no cryptocurrencies then the Chinese crypto investors would be forced to buy Chinese CBDC.
As regards Israel’s CDCD project, however, BOI has stated that the plan is not finalized yet. Nor has there been any foregone conclusion, said the Steering Committee of BOI. However, the important thing to note is that the ad hoc plan has been made public. BOI is expecting to receive public comments and recommendations regarding the ad hoc plan and see if it could be further improved.
BOI stated that currently, the bank is in the process of establishing “digital commitment” which would be fulfilled by the central bank itself. It said that there is an apparent difference between the two i.e. crypto and fiat. While fiat is in the form of cash, which is kept safe in the accounts, maintained by its beneficiaries with the banks. However, in the case of digital currency, there is no hard cash and all the records are maintained digitally with the commercial banks of crypto owners. Therefore, the obligation is that of commercial banks and not of the central bank. BOI said that there has to be a mechanism put in place, which can ensure that none other than BOI itself fulfills the obligation.
BOI told further that though the CBDC would be digital, yet it will be different from other CBDCs. The bank stated that the CBDC can be used online and offline for the settlement of payments. It can also be converted into local fiat, depending on the need of the user, and without the need to go live.
