Andrew Abir, the Deputy Governor of the Bank of Israel, said that the financial institution had started to conduct a pilot program for a digital shekel.
It has been reported that while speaking at a conference of the Fair Value Forum of IDC Herzliya, Abir added that he was not optimistic about the bank issuing a central bank digital currency (CBDC) despite the fact he confirmed a pilot test was underway.
He said:
“I had previously estimated that the chance of having a CBDC within five years is 20%. My estimate has increased a bit in the last year, mainly because other countries are advancing with it too, but still there is less than a 50% chance.”
However, the Bank of Israel has made no formal announcement on its website regarding the issuance of a digital shekel as of June 22. Last month, the financial institution said it was preparing an action plan to explore the benefits of a CBDC on the Israeli economy, adding it would be prepared to do so should the benefits "outweigh the costs and potential risks."
The report said that at the time, the central bank said it may consider issuing a CBDC if such meets the needs of the future digital economy and provides more efficient cross-border payments. Bank of Israel also hopes to reduce the use of cash and ensure the public can make payments with "a certain level of privacy."
The deputy governor said:
“The option for a CBDC is still being examined, and when we made our statement last month, it was not to say what we are doing, but rather to share what we do not know and receive feedback from the public.”
He added that the country’s banks “will still have an important part in the entire payment system” following any potential rollout of a digital shekel. Despite his seeming willingness to eventually integrate a CBDC into the country’s economy, Abir criticized Bitcoin (BTC) as a means of payment.
He added:
“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.”
Israel’s central bank begins exploring the introduction of a CBDC four years ago with the establishment of an interdepartmental group tasked with exploring the matter.
Thus, in 2018, the team recommended against the Bank of Israel issuing a digital currency, saying "no advanced economy has yet issued digital currency for broad use."
Source: Cointelegraph | Image: Reuters
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