Israel Opt Against The Digital Shekel

By Prashant Jha

The Bank of Israel commissioned a Research Study regarding the feasibility of a digital form of its currency Shekel. As per the reports released by the bank, the Digital Shekel is not compatible in various fields and departments. Thus, the Bank of Israel should discontinue any plans of releasing Cryptocurrency until the technology becomes suited to the different areas of work. If the digital Shekel had come true, it would hold a value equivalent to one Shekel.

According to a report in 2017, Israeli Defence Ministry and the Bank of Israel came up with a joint venture to explore the possibilities and advantages of a cryptocurrency. Under the then Bol Governor Dr Karnit Flug, a team was created which measured on different Pros & Cons of issuing a Central Bank Digital Currency (CBDC). Some potential positives that came up at that time were faster money transfers, instant digital payments, and a crackdown upon the unreported economy, which will eventually increase the Tax base.

The Research and What it says

As per the latest reports from the study conducted in 2017, it has been recommended to shelve any plans of making cryptocurrency. The Bol Governer, however, ensured that it is not the dead end of the Crypto or digital Currency. But, for the time being, the Bank must follow a status quo on the project.

An excerpt from the Research Study:

“The team does not recommend that the Bank of Israel issue digital currency in the near future. It is necessary to continue examining the field and to follow developments around the world before there are proper grounds for a decision to recommend issuing digital currency.”

Bol in its reports acknowledged that different central banks are looking into various possibilities to make use of Block Chain based Cryptocurrencies in the system. However, the fact that no Central Bank of a stable economy can do it asserts it needs more time and research before making its foray into our banking systems. The Report also takes the example of Venezuelan government which did issue CBDC from its Central Bank. Different controversies and failures have marred the Venezuelan Government’s CBDC.

The report said that the digital form of currency can be used as a substitute for the physical way in times of crisis. Israel at the moment is very capable and functional with its current form of banking system.

The Digital Shekel brings along a lot of complexities and litany of its own, which can prove to be damaging to the Central Banking system. So, unless we arrive at a point where the physical and centralised form of banking can go parallel with Block Chain and Digital form of currency, it’s better to stick to the current one.

Exclusive Summary of the Report, Click Here.