The Bank of Israel, already used to testing the limits of monetary policy, is eager not to fall behind in crossing a new frontier for central banks.
Policy makers in Jerusalem are expanding their research into central bank digital currencies, or CBDCs, and sounding out stakeholders about risks and benefits, according to Yoav Soffer, head of the bank’s digital shekel project. But its roll-out still remains hypothetical given questions that range from the token’s cost to the impact on the banking system, Soffer said.
After running experiments using Ethereum, the central bank is planning further technical studies in the year ahead to assess the viability of different types of digital money, Soffer said in an interview. “Right now, we are increasing the resources devoted to the digital shekel project, both in terms of finances and people,” he said. “A digital shekel has great potential to increase competition and innovation within the payment industry.”
Analysts at Bank of America Corp. have argued that central banks will inevitably launch their digital coins to ward off the risk of losing monetary control in a world of decentralized cryptocurrencies and the potential for a widely adopted digital dollar.
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