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Israel’s central bank is reportedly ready to launch a pilot of its central bank digital currency (CBDC) and could work with Ethereum as the underlying blockchain.
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The next step towards launching the CBDC in Israel
Many countries, including China, Japan, France and Sweden, have been working for years to develop a digital version of their national currencies. According to a Globes report, the Central Bank of Israel has also joined the trend and is in the early stages of issuing CBDCs.
The central bank is said to have conducted its first trial using blockchain, but has not confirmed whether Ethereum will indeed be part of the program, but it is certainly one of the technologies the bank is considering in the early days. Yoav Soffer, CBDC project manager at the Bank of Israel, said:
“We did a trial run with Ethereum technology, not because we thought it was necessarily the technology we were going to use, but because it was a technology that was available to us to try it out and understand its benefits. and its drawbacks. “
During the CBDC test, there was a digital and technical implementation of digital shekels, the test was performed on Ethereum with a digital wallet. Participants sent a digital shekel assigned from one wallet to another. The Ethereum technology used for the tests was completely different from the main blockchain that powers the ETH cryptocurrency.
Israel’s central bank explores economic, legal and technological aspects of the CBDC
The Bank of Israel tested the economic, legal and technological aspects of the CBDC in its trials, using technology similar to that previously used by central banks in Australia, Hong Kong and Thailand.
“It is a real challenge to lead such a project. Projects at the Bank of Israel usually have start and end dates. You know when it will end and what needs to be done along the way. Now with all that that entails, we don’t know when this project will end. Mr Soffer said at a conference last week.
Digital payment methods are on the rise in Israel during the COVID-19 pandemic. The CBDC could therefore benefit from support among the local population. However, the Bank of Israel is not sure that it can design a digital version of the shekel that can meet all the needs of the local population. For example, Israel’s major financial institutions must have a solution in the event of an emergency or network failure so that people can transact offline.
In this regard, China is currently leading the way with its digital yuan, which is almost ready to go. Public trials of the digital yuan have been underway for nearly two years, having completed its development in 2019.