Israeli central bank official, Andrew Abir, envisions the digital shekel’s introduction as a catalyst for driving technological advancements that will spur competition within the banking sector. He acknowledges the ongoing initiatives to enhance competition in the Israeli banking industry, emphasizing that there is still a considerable distance to cover. Abir acknowledges the mixed public sentiment towards commercial banks in Israel, attributing part of the dissatisfaction to the necessity for enhancing competition in specific industry segments.
In its current planning phase, the digital shekel is designed to incorporate an interest payment option. Abir reassures the public that the development of the digital shekel will be overseen by the Bank of Israel, a reputable institution supporting the traditional cash system. He contrasts this by noting that unlike Satoshi Nakamoto, the anonymous figure behind Bitcoin, the digital shekel will be created transparently and accountably by a central bank.
Abir underscores the advantages of introducing the digital shekel for the Bank of Israel. It would grant the central bank increased access to central bank money, facilitating its utilization in digital transactions. This move aims to counteract the decreasing trend in central bank money usage resulting from advancements in the private sector. Moreover, the digital shekel could prompt commercial banks to offer elevated interest rates to customers, as the availability of digital shekels would intensify competition.
The digital shekel has garnered substantial support among the Israeli populace, reflecting a favorable reception towards its potential benefits. The implementation of a Central Bank Digital Currency (CBDC) like the digital shekel is viewed as a stride towards augmenting competition in the financial landscape, fostering innovation, and ultimately bolstering the Israeli economy.
As the Bank of Israel progresses in developing the digital shekel, its objective is to establish a reliable and efficient digital currency aligned with the nation’s financial objectives. With the endorsement of central bank officials such as Andrew Abir, the digital shekel holds the promise of revolutionizing the Israeli banking sector and paving the way for a more competitive and technologically sophisticated financial framework.
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