Bank of Israel Plans Digital Shekel as Part of Its Future Payment System

Highlights:

• Israel is planning to launch a CBDC, but it has not decided when it will launch.
• The digital shekel will offer faster payments and privacy than current options.
• A final decision will be made after public discussions and submissions are made.

The Central Bank of Israel has published a preliminary design of the digital shekel. It explains the planned ecosystem, functionality, and technical parts of the design. Meanwhile, the central bank has not yet decided whether to proceed with the actual launch of the currency. The Bank of Israel will issue the currency while onboarding, deposits, and all financial services will be the private sector’s responsibility.

Israel releases preliminary design for digital Shekel

The Bank of Israel has published a preliminary design for the digital Shekel (DS), outlining its technical framework, ecosystem and regulatory considerations, according to Cointelegraph. The central bank plans to work with…

— CoinNess Global (@CoinnessGL) March 4, 2025

The proposal aims to create a currency accessible to the entire public, businesses, and financial institutions. A digital currency could be used by the central bank to aid the economy and offer better financial accessibility.

Key Features and Expected Benefits of the Digital Shekel

The digital shekel is designed to support swift transactions. Users will be able to make offline payments since it will feature offline functionality. In addition, the currency will be compactible with other payment systems. Users will be able to receive or make payments even if the other party does not use the digital shekel.

The Bank of Israel stated that the digital shekel would offer better privacy than existing virtual payment methods by allowing limited anonymous transactions. However, the system will follow regulations on anti-money laundering and counter-terrorism laws.

The goal of the digital shekel is to offer businesses a low-cost payment option. According to the central bank, transaction costs will be lower than for existing digital payments. However, the fee structure has yet to be worked out. It will also support instant settlements, cutting the timing of financial transactions.

Interest in CBDCs is on the rise globally. As of now, 134 countries and currency unions are looking into CBDCs. This number has risen from 35 in May 2020. These nations now represent 98% of the global GDP. Some countries have already launched digital currencies. The Bahamas, Jamaica, and Nigeria have fully implemented their CBDCs.

Meanwhile, the BRICS nations—Brazil, Russia, India, China, and South Africa—are in the testing phase. The European Central Bank recently released its first progress report on the digital euro, outlining key features. A report released by the Official Monetary and Financial Institutions Forum found that central banks intending to launch a CBDC are proceeding with their plans. However, approximately 31% have delayed implementation.

European Central Bank chief Christine Lagarde announces the latest development of the EU's new CBDC—the digital euro—supposedly "a digital form of cash".

"Another significant development on the horizon is our digital euro. We are in the preparation phase." pic.twitter.com/THUyzDRDSq

— Wide Awake Media (@wideawake_media) January 31, 2025

Next Steps and Public Involvement in the Digital Shekel Project

The Bank of Israel will continue researching the digital shekel’s feasibility. The public can submit feedback on the design until April 30, 2025. A final decision to launch the digital shekel will not be made until after 2026. Ultimately, the decision will be based on findings from research, regulatory assessment, and public input. The central bank wants to make sure that the digital shekel will meet the security and efficiency standards.

The central bank has a detailed plan in place, but the final decision will depend on these further discussions with the government. Careful evaluation shall occur to arrive at a balance of financial stability, innovation, and public interest.