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Israel’s central bank is ready to pilot its CBDC

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Israel’s central bank is reportedly ready to launch a pilot of its central bank digital currency (CBDC) and could work with Ethereum as a basic blockchain.

Next step to launch CBDC in Israel

Many countries, including China, Japan, France, Sweden and others, have been working for years to develop a digitized version of their national currency. According to a report from the Globes portal, the Israel’s central bank, which is in the initial stages of issuing the CBDC, has also joined this trend.

The central bank reportedly conducted the first blockchain test, but did not confirm whether ETH would actually be part of the program, but is certainly one of the technologies that the bank is considering in the early stages. Yoav Soffer, CBDC project manager at the Bank of Israel, said:

“We did a test with ETH technology, not because we think it’s necessarily the technology we’re going to use, but because it was the technology we had to try it out and understand its advantages and disadvantages.”

During the CBDC testing, digital and technical implementation of digital shekels took place, tests were performed on Ethereum with a digital wallet. Participants sent an assigned digital shekel from one wallet to another. The ETH technology used for the tests was completely different from the main blockchain that powers the cryptocurrency ETH.

The Central Bank of Israel examines the economic, legal and technological aspects of the CBDC

During its testing, the Central Bank of Israel tested the economic, legal and technological aspects of the CBDC and used technology similar to that previously used by the central banks of Australia, Hong Kong and Thailand.

“It is quite difficult to lead such a project. Projects in the Bank of Israel generally have start and end dates. You know when it will end and what needs to be achieved along the way. Now, with all that, we don’t know when this project will end,” Soffer told a conference last week.

During the COVID-19 pandemic, digital payment methods are on the rise in Israel. The CBDC could therefore have support among local people. However, the Bank of Israel is not sure whether it can design a digital version of the shekel that could serve all the needs of the local population. For example, Israel’s top financial institutions need to have an emergency or network outage solution so people can handle transactions offline.

In this regard, China is currently leading a race with its digital yuan, which is almost ready to launch. Public tests of the digital yuan have been underway for almost two years since its development in 2019.

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