The Bank of Israel is preparing an action plan for the potential issuance of a digital shekel (SHAKED), despite the fact that a decision has not yet been made as to whether the Bank intends on doing so.
The questions of the circumstances under which it would be decided to issue a retail CBDC is a complementary important discussion to the significant work being done on the business and technological specifications.
Several scenarios could lead to the creation of a digital shekel:
- Decline in the legitimate use of cash and its acceptance in transactions in Israel – According to our data, cash is still used in Israel in a significant portion of the consumer transactions. However, it is highly probable that the use of cash as a means of payment will decline in the future, with the expanding adoption of payment applications and of electronic means of payment in general.
- Significant penetration of stablecoins or other private means of payment that would be broadly used.
- Technological developments in the payments system – It may turn out in the future that there would be significant justification for issuing a digital shekel, since it would be able to serve as an efficient and secure platform for advanced technological use cases.