Israel Central Bank Considers Digital Currency for Instant Payments

December 25, 2017 10:20 AM UTC

The Bank of Israel is reportedly considering issuing a digital currency to support a real-time nationwide payments system.

In its advent to research and foster a real-time payments system in the country, the Bank of Israel sees a central bank-issued digital currency as an option for an effective and reliable infrastructure for immediate payments. For context, the Bank of Israel published a public consultation paper [PDF] on November 15 that sought proposals for a payments infrastructure, either “centralized or distributed – that will support immediate payments in Israel.”

As Reuters reports, an anonymous Bank of Israel source has now confirmed the central bank is examining the possibility of issuing a blockchain-powered cryptocurrency for a faster payments infrastructure.

While a faster payments system, akin to the likes of the UK and Singapore (as cited by the BOI paper) is a possibility, “a central bank-issued digital currency is another form of an advanced payments system which currently does not exist,” the anonymous central bank official said.

According to the unnamed source, a digital currency issued by the central bank would be ‘centralized, safe and abide by money laundering rules’ unlike decentralized cryptocurrencies like bitcoin.

The source further added:

Central banks around the world are examining (the use of digital currencies) so we should as well.

A digital currency would also help the Israeli government reduce the amount of physical cash in circulation with an estimated 22% of the country’s national output currently in the black economy.

A number of central banks around the world are actively researching and exploring the issuance of cryptocurrencies. The most notable of these efforts sees China’s endeavor establish a digital currency research institute this year after an early successful trial, made public this year, revealed the People’s Bank of China issue its own digital currency over a blockchain. In September one PBoC researcher urged the central bank to issue a digital currency “as soon as possible”. Elsewhere, a meeting between Russian president Vladimir Putin and Moscow’s political elite in mid-October resulted in Putin calling for a state-issued cryptocurrency, tentatively dubbed the ‘cryptoruble.’

Bank of Israel image from Shutterstock.

Last modified: May 20, 2020 9:15 PM UTC

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Samburaj is the Chief Editor of CCN.com, one of the earliest and foremost publications covering blockchain, cryptocurrency, and financial technology news. He has authored over 2,000 articles for CCN.com. Reach him at samburaj@ccn.com. Visit his LinkedIn profile here or his Muck Rack profile here. Samburaj Das is a Trusted Journalist.