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Bank of Israel Official Reveals an Upcoming CBDC Pilot

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  • Deputy Governor of Israel’s central bank, Andrew Abir, recently revealed that a CBDC pilot is underway.
  • He pointed out that this does not mean that a CBDC will be launched — the bank is simply exploring the idea and doing tests.
  • Whether or not the coin will see launch depends on a number of factors, and the officials simply do not know how they will proceed yet.

Central banks around the world continue with their efforts to research, create, and even launch their native cryptocurrencies, popularly known as CBDCs (Central Bank Digital Currencies). The most recent one, however, appears to be the central bank of Israel, whose Deputy Governor just confirmed the creation of a digital shekel pilot.

According to the statement given by the Deputy Governor, Andrew Abir, the bank has apparently already issued a CBDC through a pilot test. However, Abir personally does not seem optimistic about the idea.

In fact, during the conference of the Fair Value Forum of IDC Herzliya, he said that he does not expect that the CBDC will be issued, even though a pilot test was coming.

The question of crypto in Israel still highly debatable

Israel has had contact with crypto over the last few years. In late 2020, the country requested that its crypto users report their coins to the country’s tax authority, the ITA. This came only a few months after a draft that proposes exempting Bitcoin from taxation.

However, it is clear that there are concerns about the use of crypto, especially after some reports revealed that Hamas is using cryptocurrency to bypass terror sanctions.

With all of this happening, it is understandable why the stance towards cryptocurrencies is a matter of debate, and why some would be more or less excited about the prospect of a new cryptocurrency, this one launched by the country’s central bank, itself.

Abir admitted that his original estimate said that the chance that the country would create a CBDC within five years was 20%. Last year, that estimate increased, mostly due to the fact that so many other countries have announced their own CBDCs, as well as significant progress in developing them. However, he estimated that there is still less than 50% chance that Israel will follow their example.

The launch of Israel’s CBDC is still not a certainty

The central bank’s timetable still remains completely unknown, however, even now when the CBDC pilot has already been revealed. The bank did not make an official announcement regarding the potential issuance of the coin, but on the other hand, it also did not say that it doesn’t plan to launch it.

All that it did say was that it is preparing an action plan to explore the potential benefits of a digital shekel on the country’s economy. It said that it will react based on those findings, so if the advantages outweigh the risks, it might consider launching a CBDC. Of course, the benefits are not the only thing that would decide whether or not the coin will go live. Another factor is whether or not there is an actual need for the coin in order to secure the future of the country’s economy, whether or not it could ensure more efficient and secure international payments, and more.

The bank does seem to be interested in reducing the public’s reliance on cash, however. It also noted that it wants to bring more privacy to making payments. It stressed that the idea is still being examined, and that previous statements were not made to notify the public of what the bank is doing, but rather to share what is a potential option, in hopes of receiving feedback.

The deputy governor also reassured the country’s banks by saying that they will still have an important role to play even if the CBCD gets launched, meaning that it won’t eliminate the need for banking institutions. However, despite the fact that he is relatively open to the idea of a CBDC, he is still a strong critic of using Bitcoin as a payment method.

Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.

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