Israeli central bank official, Andrew Abir, sees the introduction of the digital shekel as a catalyst for technological progress that will increase competition in the banking sector. He acknowledges ongoing efforts to increase competition in the Israeli banking industry and says there is still a long way to go. Abir says that public sentiment toward commercial banks in Israel is not always favorable, and part of the dissatisfaction stems from the need to improve competition in certain sectors of the industry.
The digital shekel, which is currently in the planning stages, is designed to include the option of interest payments. Abir assured the public that the digital shekel will be developed by the Bank of Israel, a trusted institution that stands behind the traditional cash system. He emphasizes that the digital shekel will not be created by an unknown entity Satoshi NakamotoBy the pseudonymous creator of Bitcoin, but also by a transparent and accountable central bank.
Abir also highlighted the benefits of launching a digital shekel for the Bank of Israel. This will give the central bank greater access to central bank money, facilitating its use in digital payments. This would counter the declining trend in the use of central bank money as a result of growth in the private sector. Additionally, the digital shekel could encourage commercial banks to offer higher interest rates to customers, as the option to hold digital shekels would increase competition.
The digital shekel has received strong support among the Israeli public, indicating a positive reception for its potential benefits. The introduction of a CBDC like the digital shekel is seen as a step towards increasing competition in the financial system, promoting innovation, and ultimately benefiting the Israeli economy.
As the Bank of Israel continues to develop the digital shekel, it aims to create a reliable and efficient digital currency that aligns with the country’s financial goals. With the support of central bank officials like Andrew Abeer, the digital shekel has the potential to revolutionize the Israeli banking industry and pave the way for a more competitive and technologically advanced financial system.
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