Update on the Bank of Israel digital shekel project (Davar HaYom)
The Bank of Israel’s Yoav Soffer provided an update on the digital shekel project, which he leads, in a couple of local media outlets. The project team want to finalize the plan by the end of 2026, after which they will present it to the Governor, who will decide whether to launch the digital shekel. The current thinking is that it would provide for an offline payment wallet by which it will be possible to set a certain amount in advance to be held by phone or prepaid card that can be used to make payments when there is no internet connection. It will also allow for anonymous payments up to a certain amount, both offline and online, in a way that will not even be accessible to payment service providers. The project team is also considering allowing the digital shekel to bear interest, which will create an incentive for banks to offer better interest rates on deposits, and push Bank of Israel policy rate changes out to the economy faster and more efficiently. [Read more in Davar HaYom and also Makor Rishon]
Wholesale, retail and multi-purpose digital shekel proposal (LinkedIn)
In a LinkedIn post, Yoav also discusses how the long-run plan for a prospective digital shekel would blur the distinction between retail and wholesale central bank digital currency (CBDC). Box 2 in the design paper published on March 3, 2025 rejects the notion that wholesale use cases (and users) and retail use cases (and users) cannot be served by one system. The proposed design offers the concept of a “multipurpose CBDC” – one reservoir of digital central bank money, available for all users and use cases in the economy – of course, with the adequate controls, risk management measures, and regulatory requirements attached to each type of user. [Read more on LinkedIn]
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