Israel is advancing its central bank digital currency (CBDC), the digital shekel, aiming to transform its payment systems.
The Bank of Israel (BoI) has initiated a project to develop a digital payment infrastructure around the digital shekel by partnering with various service providers.
This project draws inspiration from the “Project Rosalind” by the Bank of International Settlements (BIS) Innovation Hub and the Bank of England, focusing on building prototypes for application programming interfaces.
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In this experiment, participants will use a sandbox environment furnished with application programming interfaces (APIs) to develop real-time CBDC payment solutions for the public.
The process involves three stages: submitting applications and presentations, granting network access to selected projects, and final presentations evaluated by a panel of judges.
A translated explanation by the BoI highlights:
Priority will be given to uses with original and innovative features in the world of payments, whether they are improvements to existing applications or completely new applications. The uses can match the unique needs of a certain population, serve the needs of a certain sector of the economy, or support an innovative application that will serve a wide variety of scenarios.
Shauli Rejwan, managing partner at Masterkey Venture Capital in Tel Aviv, explained that this initiative could encourage collaboration between the Web3 industry and governmental sectors.
BoI Deputy Governor Andrew Abir stated that competition from CBDCs could be beneficial for the economy, potentially prompting banks to offer higher interest rates. Abir is confident that the digital shekel will receive public support, noting the transparency and accountability of its development process, unlike cryptocurrencies created by anonymous developers.
Overall, the initiative demonstrates Israel’s aims to innovate the country’s digital payments and to build a secure and efficient CBDC ecosystem.
Meanwhile, in the US, the House of Representatives passed the CBDC Anti-Surveillance State Act to ban the Federal Reserve from issuing a CBDC.
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