In the quest not to fall behind in its drive to develop a central bank-backed digital currency (CBDC), policymakers in Israel reportedly tested stakeholders’ views to determine the risks and limits of a national digital currency.

Yoav Soffer, the head of the Bank of Israel’s digital project, announced the trial, as reported by Bloomberg. He noted that knowing the opinion of stakeholders is an ongoing process, even though the digital shekel is still in its developmental stage and no specific date has been fixed for the launch.

He added that some of the challenges associated with the roll-out of the digital currency are assessing the impact of the currency on the banking system and determining the cost of the token.

The Shekel Built on the Ethereum Network

The proposed digital shekel is being built on the Ethereum network, as CryptoPotato outlined recently. According to Soffer, the project has gone through extensive trials, and the team is working on further technical studies down the line.

“Right now, we are increasing the resources devoted to the digital shekel project, both in terms of finances and people,” he said. “A digital shekel has great potential to increase competition and innovation within the payment industry.”

The recent concerted effort by the Bank of Israel to explore the prospect of a digital shekel came after an earlier attempt in 2018. The team set up by the central bank had advised against the establishment of a digital token at that time. However, with the world’s top economies actively pursuing digital versions of their currencies, the Bank of Israel is taking another look at its prospects.

Some Central Banks Already Launched CBDCs

A few countries, such as the Bahamas and Nigeria, have already launched digital versions of their currencies. This is in accord with the views of experts at the Bank of America Corp. who announced that the CBDC adoption by central banks is inevitable as countries realize the potentials of the technology.

China is also considered a highly-advanced nation in terms of its CBDC. The world’s most populated country has initiated multiple tests with locals and released digital yuan wallet apps for android and iOS users.

Featured Image Courtesy of Business Standard