Israel Commences Experimental Implementation of Digital Shekel CBDC for Payment Purposes

Israel is set to accelerate the creation of its own digital currency, the digital shekel, by involving multiple service providers in the development of an advanced digital payments ecosystem. The Bank of Israel (BoI) aims to collaborate with various entities to build a real-time central bank digital currency (CBDC) payment system for the general public. The initiative, known as Project Rosalind, is a joint effort between the Bank for International Settlements (BIS) and the Bank of England, with the goal of creating prototypes for an application programming interface (API). Participants in the project will have access to a sandbox environment and will compete to develop the most innovative CBDC payment solutions. Despite not currently considering decentralized finance, zero knowledge, and permissionless solutions, the initiative has the potential to bridge the gap between the Web3 industry and the government, according to Shauli Rejwan, managing partner at Masterkey Venture Capital. The experiment is open to entities from the private, public, and academic sectors and allows participants to build solutions for both universal use cases and unique niches and scenarios. The development of a digital shekel is expected to receive support from the public and could benefit the BOI by incentivizing banks to offer higher interest rates. However, concerns about privacy breaches have been raised during the public consultation process.