Bank of Israel Is Considering The Benefits Of CBDC Launch Plan
The bank reviewed the criteria that would permit or support a decision to issue a BOI CBDC at some time in a recent paper, highlighting a variety of elements that may influence the Steering Committee’s conclusion.
According to the Bank of Israel Steering Committee, the first reason the government might issue a CBDC is if developed countries such as the United States or the European Union create a digital currency. According to the bank, the choices of these nations would be an important element in Israel’s issuing decision.
Another factor that might force the Bank of Israel to adopt a CBDC is a decrease in the lawful usage of cash and its acceptability in transactions. The bank said that cash use might diminish in the future and that there would be a need to retain public confidence.
In such a case, the bank would be required to use a CBDC in order to preserve people’ and companies’ capacity to complete transactions while reducing private entity intrusion.
Additional variables influencing the Bank of Israel’s decision to issue a CBDC in the future include the amount of competition in its domestic payment system and technical payment improvements.
CBDCs have received increased attention from financial regulators in the United States and the European Union. Christine Lagarde, chief of the European Central Bank (ECB), has cautioned that if central banks do not accept digital currencies, they will lose significance.
The Bank of Israel discussed criteria that might support a future decision to issue a CBDC. It includes CBDC issuances by other nations, such as the United States and the European Union, falling cash transactions in Israel, stablecoin acceptance, local payment system rivalry, and technical payment improvements. A stablecoin that is not tied to the national fiat currency may damage the monetary transmission, the bank stated.
Under the Icebreaker project headed by the Bank for International Settlements (BIS) Innovation Center, the central banks of Israel, Sweden, and Norway have recently been studying the possibility of retail CBDCs. Previously, the Bank of Israel collaborated with the Hong Kong Monetary Authority on trial to test a new digital currency issue in Israel.
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