The Central Bank of Israel has released a draft model of their digital currency as the nation joins other governments to issue its own digital currency.
The Israeli Central Bank Digital Currency (CBDC) , a virtual version of the Israeli Shekel, would be structured to enable Israelis to make payments online and offline and convert it to cash whenever required. Like other digital currencies, CBDC would also be expected to offer some privacy and anonymity to holders.
Israel has followed the trend to join other nations of the world to issue its digital currency after a lengthy period of deliberation and arrangements. A final decision is yet to be made, nevertheless, the highly anticipated project is gradually becoming a reality, according to reports from the bank’s Steering committee.
The decision to release the digital equivalent of the Shekel is to respond to the growing needs of the developing payment market and not specifically concerning the spread of cryptocurrencies.
How the Digital Shekel is Expected to Function
Israel’s Central Bank intends to create the digital shekel to serve as “digital commitment” the same as “physical commitments” in the form of coins and banknotes.
Israel’s digital Shekel, though digital, has a different concept as compared to commercial bank money. The currency will represent a legal commitment by commercial banks in the nation to citizens.
According to the outlined arrangements, the Central Bank of Israel after launching CBDC will offer it to payment service providers like the banks, fintechs, credit card issuers, and other institutions who would bear the responsibility of providing the digital shekels to customers. These institutions, however, would not be permitted to give out loans in the digital asset.