Israel to Build Ethereum-Based Digital Shekel: Report

Israel will build a digital shekel based on the Ethereum network and the blockchain for the CBDC pilot phases, as we read more today in our latest ETH news.

The Central Bank of Israel will set up a new digital project, or shekel, based on Ethereum, which aims to create a digital central bank currency based on the ETH blockchain, however the project can face major challenges. Most of the leading countries, including Japan, France, Sweden and China, have been working on developing a digitized version of their local currency for years. As Globes reports, the Central Bank of Israel has joined the trend and the rest of the countries are issuing CBDCs. The institution chose the ETH network to take the plunge, as CBDC project manager Yoav Soffer explained:

“We experimented with Ethereum technology, not because we thought it was necessarily the technology we were going to use, but because it was technology that was available to us so that we could understand the advantages and disadvantages. “

The Bank of Israel has created groups to set up a test bed based on the ETH blockchain and issue a new token representing CBDCs, and they are designing a digital wallet for team members to exchange imaginary digital shekels at the bank. It is worth noting that Australia, Thailand and Hong Kong all use the same methodology in their CBDC projects, so Israel has begun exploring the legal, economic and technological aspects. Soffer says the initiative is challenging and points out that its complexity makes it difficult to give an end date for a test project:

“In general, projects at the Bank of Israel have a start and an end date. You know when they will end and what you need to accomplish along the way. We don’t know when this project with all that is connected will end. “

During the COVID-19 pandemic, digital payment methods are on the rise in Israel and issuing a CBDC sounds like an idea that could fit into new social habits. There are some challenges ahead of it. The Israeli central bank is unsure whether the design is suitable for a digital version of the shekel that can serve all the needs of the local population, and the infrastructure for these products does not seem to be ready in the long run. For example, leading Israeli financial institutions can provide a solution in the event of an emergency or network problem so that everyone can pay for transactions offline.