The Central Bank of Israel has provided an overview of the factors that could potentially trigger the development of its own digital currency, SHAKED.
While a final decision has yet to be made, the bank has identified a few key conditions that may lead to the launch of the digital shekel.
The first of these is the introduction of state-backed digital currencies by other developed nations, including the United States and the European Union.
This eventuality is seen as quite likely in the years to come. Another important factor is the decline in the popularity of cash as a payment method, which is still widely used in Israel.
However, the central bank acknowledges that as payment apps become more prevalent, demand for physical currency may decrease.
In addition, the widespread adoption of stablecoins that are not tied to the shekel or other private payment methods that could pose a threat to the payment system could also prompt the launch of the digital shekel.
While the bank does not currently see any signs of a rapid shift towards stablecoins in Israel, this could change in the future.
Ultimately, the bank’s decision to launch a digital shekel would be driven by a desire to offer fast, secure, and cost-effective payment options using advanced technology solutions.
Last year, the Central Bank of Israel indicated that the country’s citizens support the idea of a digital shekel and that minimal client information would be required for its use.