Bank of Israel Considers CBDCs in Response to Increased Stablecoin Activity

According to reports, the Bank of Israel is said to be developing an action plan for the potential issuance of a central bank digital currency (CBDC), although no official decision has been made yet.
The Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel has presented possible scenarios for the development and deployment of a CBDC, called "SHAKED".The Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel outlined various scenarios that could result in the issuance of a digital shekel, including a rise in stablecoin usage. The committee cautioned that increased adoption of stablecoins could potentially damage the payment system and hinder monetary transmission.However, the committee acknowledged that there are currently no substantial indications of stablecoin adoption as a means of payment in Israel. They suggested that changing public payment habits could rapidly lead to the adoption of stablecoins, especially if a significant private sector entity issues them.Another potential driver of CBDC development in Israel is the decline in cash usage in the country, although cash is still used for a significant portion of consumer transactions. The Bank of Israel is concerned about a situation where private entities control payments, and a CBDC could be the solution to prevent this. The issuance of a CBDC in Israel could support competition in the payments system and the financial system in the digital era.The Bank of Israel Steering Committee stated that it will contemplate releasing a CBDC if the United States or the European Union issues one. The committee concluded that it is keeping a close eye on the situation and preparing to advance the digital shekel accordingly.The Israel Securities Authority (ISA) recently proposed legislation that would classify crypto assets as securities in the country. Industry executives have expressed concern that this could "kill the industry."