Israel Decision on Digital Shekel Won't Occur Before the EU's Call on Digital Euro: Reuters

  • Israel won't decide on introducing a central bank digital currency (CBDC) before the European Union, a senior official of its central bank told Reuters.
  • Neither Israel nor the EU has yet committed to issuing a CBDC.

The Bank of Israel won't decide whether to introduce a central bank digital currency (CBDC) before the European Central Bank does, Deputy Governor Andrew Abir told Reuters.

"We’re all waiting for the first western central bank to pull the trigger, which is almost certainly going to be the ECB. And then you may see a rush of countries going forward with it," Abir said.

A few weeks ago, Israel's central bank announced the launch of a Digital Shekel Challenge as part of an "action plan for a possible issuance of the digital shekel," to develop uses in the world of payments. It reiterated then that it hadn't decided whether to issue a CBDC, even as it kept up to pace with the research.

As of May, 134 countries or jurisdictions representing 98% of global GDP are exploring a CBDC. Among them, the EU has shown particular interest in developing its own digital currency. Last year, it proposed legislation for the digital currency, even though officials have said the work on a digital euro is not a commitment to issue one.

Abir said whether the public will adopt a digital shekel is uncertain, and the bank is conducting a behavioral study on the subject. He said that one has to have "a good set of use cases." But in a nation where two large banks dominate more than 60% of the market, the main incentive is to create a "level playing field for payment providers and allow them to compete with the banks"

Read More: Israel to Start Digital Shekel Challenge to Develop Payment Use Cases