Israel’s Digital Shekel to run on Ethereum

Israel’s central bank, The Bank of Israel has adopted Ethereum technology to conduct a pilot run of a digital equivalent of the country’s fiat currency, the shekel, per a report from Bloomberg. In May this year, the bank released a model of the currency also known as Israeli Central Bank Digital Currency (CBDC).

The bank, like many others, credited the move towards digital currencies to its ease of use, convenience-facilitating online and offline transactions, and higher levels of privacy and anonymity.

The bank had earlier stated that the currency would operate like normal currency. However, the limitation was that institutions offering digital assets such as banks, credit card issuers, and fintech would not be permitted to issue loans in the digital currency.

Although the bank is yet to issue an official statement on its reasons for settling on the ethereum blockchain, the move shows how far the country has come with regard to adopting cryptocurrencies. In 2018, the bank had referred to Bitcoin as an asset, not a currency. The then deputy governor Nadine Baudot-Trajenberg stated that,

The anonymous nature of virtual currencies leads to the possibility that they may be used to launder money, finance crime, and so forth.

Israel joins a long list of countries that have been considering setting up their digital currencies. Recently the UK set up a task force to look into the possibility of a digital currency. China’s CBDC project was also on trial earlier this year. 

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