Israel Will Build A Digital Shekel Based On Ethereum: Report

Israel will build a digital shekel based on the Ethereum network and blockchain for stages of the CBDC trial program as we are reading more in our latest ETH news today.

The Bank of Israel will build a new digital project or Shekel based on Ethereum that aims to create its central bank digital currency based on the ETH blockchain however the project could face some major challenges. Most leading nations including Japan, France, Sweden, and China worked for years on developing a digitalized version of the national currency. As per the reports by Globes, the central bank of Israel joined the trend and the rest of the states of issuing a CBDC. The institution chose the ETH network to achieve the move as the CBDC Project Manager Yoav Soffer explained:

“We did a trial with Ethereum technology, not because we think that that’s necessarily the technology we’ll use, but because it was a technology that was available for us to get our hands dirty with, in order to understand its advantages and disadvantages.”

The Bank of Israel created teams that will set up a trial environment based on the ETH blockchain and issued a new token representing CBDCs and it designed digital wallets from which the team members are able to exchange the imaginary digital shekels within the bank. It is worth noting that Australia, Thailand, Hong Kong all use the same methodology in their CBDC projects so Israel started examining the legal, economic, and technological aspects. Soffer said the initaitive is challenging and pointed out that due to its complexity, it is hard to give a finishing day for a testing project:

“In general, projects at the Bank of Israel have start and finish dates. You know when they will end and what you need to achieve along the way. We don’t know when this project will end, with all that that implies.”

During the COVID-19 pandemic, digital payment methods have been on the rise in Israel and as such, issuing a CBDC sounds like an idea that can fit into the new habits in society. There were a few challenges in front of it. The Bank of Israel is not sure if the design is good for a digital version of the shekel which can serve all the needs of the local population and in addition, the infrastructure for these products seems not really ready for the long term. For example, Israel’s top financial institutions are able to create a solution in case of an emergency or a breakdown of the network so that people are able to settle the transaction even offline.