04-18-2023 icon

Israel’s Central Bank Says CBDC May Be Introduced if Stablecoin Utilization Improves

By Lucy Adegbe

The federal reserve bank of Israel noted that it is making plans to carry out a possible issuance of a federal reserve virtual currency –often referred to as a central bank digital currency– but it is yet to make an official conclusion on the matter.

On Monday, the nation’s advisory committee on the possible issuance of a virtual Shekel highlighted viable instances for the introduction and distribution of the CBDC, a virtual Shekel tagged “SHAKED.”

It offered diverse instances that are likely to pave the way for an issuance of the virtual Shekel, one of which is the heightened nature of the use of stablecoins.

An improved acceptance of Stablecoin can “impair the payment system,” it outlined, before noting that stablecoins not backed by the Shekel may be a threat to financial transmission.

A second possible factor that could call for the introduction of the CBDC is a plunge in the utilization of cash in the region, the advisory committee added. It explained that the use of cash for trade still dominates in the region, however, a switch in residents’ payment style could cause a drift from the utilization of the nation’s fiat.

The federal reserve bank of Israel is making sure to avoid a situation in which private firms assume absolute control of digital transactions, hence the need for the CBDC.