Israel’s central bank reportedly introduced the pilot program for a digital currency with the target of developing the country’s central bank digital currency (CBDC) which will be based on the blockchain of Ethereum. Nonetheless, there is an expectation of some serious challenges to be experienced by the project.
Israel targeting at CBDC
Several prominent countries such as China, Sweden, France, Japan, and many others have struggled for years to develop a virtual version of the national currencies thereof. As per a report published by Globes, it is expected that a project has been initiated by the Israeli central bank to issue a CBDC which is at the initial stages of its progress. The organization has selected the blockchain network of Ethreum to provide the basis for the respective move. The CBDC Project Manager under the Bank of Israel, Yoav Soffer, elaborated the reason behind choosing Ethereum’s technology.
He stated that they tested the technology used by Ethereum not due to the conception that it is the obligatory technology to be utilized, but due to its availability to them for knowing about the potential pros and cons thereof. The bank arranged teams to organize a trial ecosystem on the blockchain of Ethereum and distributed a token that represented CBDCs. Afterward, the institution developed digital wallets by which the members of the teams could exchange the supposed digital shekels among themselves under the bank.
It is noticeable that Thailand, Hong Kong, and Australia utilized the very methodology for moving the CBDC projects forward thus Israel too checked the technological, economic, and legal aspects in this respect. Soffer discussed that the initiative is challenging and it is hard to provide a conclusive date for the completion of the ongoing testing project.
In the period of pandemic “COVID-19,” a widespread upsurge has been witnessed in the utilization of methods of digital payment across Israel. Generally, the launch of a CBDC appears to be a concept being appreciated by the latest trends of society. Nevertheless, some challenges are obstructing it. The Bank of Israel has no surety about whether the shekel’s virtual version can tackle all the demands of the native population. Additionally, it seems that the infrastructure is not prepared for this type of product to sustain itself any longer. The most radical challenge is to switch a huge number of people, who are using cash, to digital shekel would be a toilsome task for the authorities.