Bank

Satoshi

Shekel

In a notable departure from conventional concerns about the potential impact of central bank digital currency (CBDC) on commercial banks, Bank of Israel deputy governor Andrew Abir offered a contrarian perspective in a recent speech published on the central bank’s website. 
Abir’s stance essentially encourages commercial banks to embrace competition, rather than viewing CBDC as a threat. Abir highlighted the significant strides made in fostering competition within the Israeli banking sector over the years, acknowledging that further progress is still needed.&nbsp; 
<h2 id="span-style-font-weight-400-bank-of-israel-and-cbdc-span">Bank of Israel and CBDC</h2> 
Despite the efforts of the Bank of Israel to combat inflation by raising interest rates, Abir noted that commercial banks have been slow in adjusting deposit rates, leading to public dissatisfaction with the banking system. 
However, Abir<a href="https://www.boi.org.il/en/communication-and-publications/press-releases/16-4-2024en"> expressed</a> confidence in the public’s support for the proposed digital shekel, emphasizing that its design includes the option to pay interest on it. Unlike cryptocurrencies developed by anonymous entities like Satoshi Nakamoto, the digital shekel would be backed by the Bank of Israel,<a href="https://thecoinrise.com/israel-could-include-crypto-in-existing-securities-legislature/"> instilling trust and accountability in its implementation</a>. 
<h3 id="span-style-font-weight-400-benefits-of-the-digital-shekel-span">Benefits of the Digital Shekel</h3> 
Furthermore, Abir highlighted the potential benefits of introducing a digital shekel for the Bank of Israel, such as making central bank money more accessible for digital payments and reversing the declining trend in central bank money use spurred by advancements in private sector technology. 
Abir suggested that the mere availability of digital shekels could incentivize commercial banks to offer higher interest rates, providing the central bank with a tool to influence the transmission of central bank interest rates. 
“In many countries around the world, including Israel, commercial banks do not win public popularity contests. […] In Israel, some of the anger directed at the banking system is the result of the need to increase the level of competition in some of the segments,” Abir noted. 
<h2 id="span-style-font-weight-400-forward-thinking-approach-from-the-bank-of-israel-span">Forward-Thinking Approach from the Bank of Israel</h2> 
Overall, Abir’s remarks underscore a<a href="https://thecoinrise.com/central-bank-of-israel-norway-and-sweden-launch-project-icebreaker-with-bis/"> forward-thinking approach to CBDC implementation</a>, emphasizing the potential for innovation and competition within the banking sector rather than fearing disruption.&nbsp; 
The reported strong support for the digital shekel among the Israeli public further suggests a<a href="https://thecoinrise.com/bank-of-israel-asks-public-opinion-for-cbdc-gets-a-positive-response/"> promising outlook for its adoption and implementation</a>. 
“The digital shekel will not be developed by some anonymous Satoshi Nakamoto. Everyone will know who is behind the digital shekel and who is responsible for it — […] the same Bank of Israel that stands behind the cash we all know and trust,” he said. 
The post <a href="https://thecoinrise.com/bank-of-israel-claims-cbdc-competition-is-good-for-economy/">Bank of Israel Claims CBDC Competition is Good for Economy</a> appeared first on <a href="https://thecoinrise.com">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Bank of Israel Claims CBDC Competition is Good for Economy

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