The latest move was in a bid to stop private companies from overtaking the digital payments system in the country.
The Central Bank of Israel Plans CBDC Deployment
During the Meeting, the committee provided several plans that may lead to the issuance of a digital shekel, among them was the basis of stablecoin increment.
It noted that Increased adoption of stablecoins may impair the payment system, it further state that stablecoins not pegged to the shekel might also harm the monetary financial transmission.
At this point, there are no signs of substantial adoption of stablecoins as means of payment in Israel. However, paying habits of the public might change rapidly, for instance in a scenario of issuance by a major private sector entity
Nevertheless, Another potential driver of CBDC development is a deterioration in the use of cash in Israel. The committee emphasizes that cash is actively in use in a significant portion of consumer end-to-end transactions in the country however a change in the public’s payment conventions may result in a transition away from using fiat.
The Bank Of Israel Precautionary Measures Using CBDC
The Central Bank of Israel aims to prevent private companies from controlling its payment system so a CBDC could be the solution. However, the issuance of a CBDC would be made to support competition in the payments system and the financial system in the digital era.
Additionally, it says, If the United States or the EU issues a CBDC, then this would also influence Israel’s determination to deploy one.
It appears Israel is tailing after the U.S. in terms of crypto regulation. Earlier this year its securities regulator, the ISA (Israel Securities Authority), proposed legislation that would rank crypto assets as securities in the country.