The Bank of Israel reportedly has launched a digital currency pilot program. It aims to create a central bank digital currency (CBDC) using the Ethereum blockchain. However, the project may face some major challenges.
fromreportGlobes, Israel’s central bank, is in the early stages of issuing a CBDC, with the institution choosing the Ethereum network to achieve this goal, which Yoav Soffer – CBDC project manager at the Bank of Israel – explains:
“We experimented with Ethereum technology, not just because we thought it was the technology we were going to use. But because it is a technology that we are ready to deal with. to understand its advantages and disadvantages.”
The Bank of Israel created a team for testing the Ethereum blockchain and issuing tokens representing the CBDC, then designed a digital wallet that team members could trade. “digital shekels” between banks
It is worth noting that Australia, Hong Kong and Thailand are using the same approach in their CBDC projects, and Israel has also investigated legal, economic and technological aspects.
During the COVID-19 pandemic, digital payment methods have increased in demand in Israel, so issuing a CBDC appears to be a concept that fits the new craze of society. However, there are still many challenges ahead. front
The Bank of Israel is not yet sure it can design the money. In addition, the infrastructure for such products does not appear to be ready to support the long term.
For example, a leading Israeli financial institution that must provide a solution in the event of an emergency or network collapse. so that people can pay their transactions offline.
In addition, central banks must create accessible and competitive CBDCs. Compared to other types of payments, otherwise, Israelis settle their daily transactions in other traditional ways.
And their biggest challenge is getting those who still use cash to switch to digital payments. The traditional method has the advantage of being anonymous. while spending money The “digital shekel” will be closely monitored by the government. which can threaten your privacy
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