The Bank of Israel is gathering support but is still skeptical of the digital shekel

While global economies have shown growing interest in CBDCs over the past year, the Central Bank of Israel has also received positive citizen support on the same. However, the position of the financial institution on issuing a CBDC is still unclear.

CBDC to the rescue?

On Monday, the Central Bank of Israel said it had garnered public support for its plans to eventually issue a digital shekel. They revealed that citizens believe that the launch of a central bank digital currency (CBDC) would help the economy by supporting innovation in the payment system, reducing the amount of cash, and supporting the fintech sector.

The Bank had increased its research and preparation efforts for the possible issuance of a digital shekel in November last year. It stepped up research to create a more efficient payments system after first considering issuing a central bank digital currency in late 2017.

Additionally, in March, financial institutions said a digital shekel is unlikely to significantly erode the banking system's business results. Finally, the Bank invited the public to weigh the pros and cons of launching a CBDC.

On May 10, the Bank of Israel said it received 33 responses from various sectors, half from overseas, while around 17 responses came from the fintech sector.

The Bank of Israel remains skeptical

Citizens of Israel believe that a CBDC could help the economy grow by supporting innovation in the payment system and reducing the amount of cash.

However, the Bank of Israel still remains uncertain. As per recent reports, the Central Bank said:

"The Bank of Israel has not yet made a final decision on issuing a digital shekel."

They also added:

"But all responses to the public consultation indicate support for continuing research into the various implications for the payments market, financial and monetary stability, legal and technological issues, and more."

A digital shekel would reportedly come at zero or low cost for entrepreneurs and consumers, and would be easy for everyone to use, including the elderly.