The Central Bank of Israel is going to release its own digital currency E-Shekel, for which in November 2017 a special group was created to study this issue. This group has published a report on the results of its study, which refers to the benefits that such a currency could give to the Central Bank of Israel and, at the same time, recommendations not to rush its release.
Features of the national cryptocurrency
This report is a 40-page document, where one of the main advantages for the bank is the ability to reduce the level of currency use in the shadow economy due to the inability to conduct unregistered transactions for users. Also an important advantage of the national digital currency will be the fact that the electronic shekel can become an important financial tool if it becomes to carry the interest. In addition, a big plus will be an increase in the efficiency of the state’s payment system and the ability of broad public masses to access the shekel’s liquidity in the event of a significant decrease in turnover and the use of cash.
The disadvantages of the national digital currency include the possible damage to the reputation of the Central Bank of Israel in the event of a possible technical failure, as well as the inability to access currency from technically poorly equipped people. In addition, many Israeli citizens may think that issuing a national digital currency is a tool to control and spy on them, which will affect the number of users of such a currency.
After Big Brother
As for developed countries, the central bank has not yet issued a national digital currency in any of them, and the Israeli bank is not eager to become a pioneer in this. The state apparatus in this country is very conservative, despite the advancement in the field of new technologies of private companies and citizens of the state as a whole. Any changes or innovations in the Israeli public sector are occurring very slowly and with difficulty. Traditionally government agencies in the country have been waiting for a long enough period until a certain amount of experience in any field appears in the world before they begin to implement something.
Despite the fact that many states have already considered the possibility of issuing their national digital currency, and some have already even implemented it, the Israeli Central Bank is guided by the similar experience of the largest economies in the world, such as the USA and Europe. The team of experts also recommended discussing the issue of issuing the national digital currency with the IMF, the Bank for International Settlements and the Organization for Economic Cooperation and Development.
However, the Central Bank does not intend to abandon this idea completely, so a specially created investigation group will monitor developments in this area and prepare reports with recommendations to the leadership of the Israel Bank every six months.