The Bank of Israel, along with numerous central banks globally, has been exploring the concept of a central bank digital currency (CBDC), which in Israel’s case will be referred to as a digital shekel.
A Central Bank Digital Currency (CBDC) is a digital form of a country’s currency that is issued and regulated by the central bank.
The Bankkoperates on a blockchain or a similar technology platform, allowing for digital transactions and potentially offering new functionalities compared to physical cash or existing digital payment systems.
CBDCs can come in different forms, such as retail CBDCs accessible to the general public or wholesale CBDCs limited to financial institutions for interbank settlements.
Central Bank Digital Currencies (CBDCs) are digital forms of national currency issued by a country’s central bank.
However, CBDCs in contrasts with crypto currenciesare which are decentralized and not typically backed by any government, CBDCs are centralized and regulated by a government or central authority.
CBDCs leverage blockchain or other distributed ledger technologies to facilitate secure transactions and maintain a record of ownership.
The primary objective of CBDCs is to modernize payment systems, enhance financial inclusion, and provide a digital alternative to physical cash.