Israel has taken a significant step forward in its financial technology sector by launching a central bank digital currency (CBDC) experiment. Despite the ongoing conflict, the Bank of Israel (BoI) is forging ahead with the digital shekel project. The aim is to develop an advanced digital payments ecosystem.
Inspired by the Project Rosalind of the BIS Innovation Hub, the BoI's initiative, known as the “Digital Shekel Challenge,” will involve various service providers.
The experiment includes creating real-time CBDC payment systems for the general public, using a sandbox environment equipped with application programming interfaces.
Participants will undergo a three-phase program: application and presentations, access to the new network for selected projects, and a final presentation judged by experts.
This initiative aims to bridge the gap between the Web3 industry and government. It’s obviously worth mentioning that Israel continues to develop its CBDC project despite the ongoing full scale war.
Entities from private, public, and academic sectors are invited to participate. Priority will be given to innovative payment solutions, whether they improve existing applications or introduce new ones. While the CBDCs are designed for universal use, unique niche solutions are also encouraged.
Deputy Governor Andrew Abir supports the development of the digital shekel, seeing it as beneficial for both the public and the BoI. He believes that the transparency and accountability of the digital shekel will gain public trust.
However, concerns about privacy breaches remain. A public consultation confirmed broad support for CBDC research but highlighted potential privacy issues. Despite these challenges, the BoI is determined to advance its digital currency initiative amidst the current adversity.