Israel’s central bank says CBDC could be issued if stablecoin use increases

The Bank of Israel has said it is preparing an action plan for the potential issuance of a central bank digital currency (CBDC), although no formal decision has yet been made.

Israel Bank Operations Committee on Possible Digital Shekel Issuance, April 17 Overview A possible scenario for the development and deployment of CBDC, a digital shekel called “SHAKED”.

We have provided several scenarios that may lead to the issuance of digital shekels. Among them was an increase in stablecoin activity.

Increased adoption of stablecoins could “undermine payment systems,” adding that stablecoins that are not pegged to the shekel “could also adversely affect currency transmission.”

“At the moment, there are no signs of substantial adoption of stablecoins as a means of payment in Israel. However, a scenario of issuance by a major private company, for example, could lead to rapid changes in the payment habits of the population. ”

Another potential driver for CBDC development is the declining use of cash in Israel, noted by the Commission. Cash is still used for the majority of consumer transactions in the country, but changes in the population’s payment habits could end the use of the central bank’s fiat currency, they said.

The Bank of Israel doesn’t want this scenario or a private entity controlling payments, so a CBDC could be the solution.

The Bank of Israel has released a document outlining the conditions that would allow or support its decision to issue digital shekels https://t.co/ALU4FEYUTh
…#Israel # Shekel #CBDC #digital currency #digital money #digital payment #CBDC #digital currency #digital shekel pic.twitter.com/Jbe49i1VnR

— Digital Pound Foundation (@digitalpoundfdn) April 17, 2023

It also said that the issuance of a CBDC would be considered to “support competition in payment and financial systems in the digital age.”

It said that if the US or the European Union were to issue a CBDC, this would also influence Israel’s decision to deploy a CBDC.

The Bank of Israel’s steering committee has concluded that it is monitoring the situation in preparation for the development of the digital shekel.

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Israel appears to overshadow the United States when it comes to regulating cryptocurrencies. Earlier this year, the country’s securities regulator, the Israeli Securities Authority (ISA), proposed legislation to classify crypto assets as domestic securities.

Industry executives have expressed concern, claiming it could “kill the industry.”

Feature: Unstablecoins: Depeg, bank crackdowns and other risks loom