Bank of Israel have tested their central bank digital currency on Ethereum.  The Central Bank Digital Currency of Israel is Digital Shekel.  The Bank of Israel have been reportedly considering to issue CBDCs since 2017. 

The Bank of Israel has to state that it has not yet decided whether it should issue a digital Shekel. However, looking at the rapid transactions and developments in the digital economy, they are accelerating their work in this issue. They are working on the research and preparation of the issuance of Digital Shekel.

Several other central banks are working on the possible implementation of the private and permission ecosystem. Most of them are making use of Ethereum.

Programmable money is a very interesting concept.  The smart contract will permit the Central Bank to define the level of CBDC transactions.  Privacy will be permitted to a certain extent; however, it will not be allowed beyond a certain limit because privacy cannot be permitted in cases where steps needs to be taken to prevent money laundering.  The smart contract can be programmed in a way to ensure that the taxes are paid in real time.

In cases, where the treasury should be proposed to distribute social grants, universal basic income to its citizens, and government pension funds – this will be done real-time directly to the wallets of the citizens.  There is no need to stand outside the banks for a long time or to wait for checks to get paid out.

Andrew Abir, the deputy governor the Israeli Central Bank Expressed:  “This is not going to eliminate the banks.  No Central Banks would bring in a digital currency with such an aim.  The banks are still an important part of any payment system that will be.  What we are talking about is a payment system.”

Further, Abir stated that the payment systems in Israel are still years behind from their European Counter Part. CBDC is expected to change it.  Reportedly, a working CBDC is expected to happen in 5 years to become a reality.

CBDCs is becoming the priority of several developed nations from across the globe.  Particularly looking at the progress in China.  Important to note that China’s digital Yuan is complete and it is under trials in several provinces and several other developed nations are in the development phase.

Recently, France and Switzerland have started a combined cross-border trial for their respective CBDCs. The Russian government will also be starting its trials from next year.