Currencies

Bank of Israel accelerating preparations for digital currency -governor

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The Bank of Israel building is seen in Jerusalem June 16, 2020. REUTERS/Ronen Zvulun/File Photo

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JERUSALEM, Nov 29 (Reuters) - Israel's central bank is accelerating its study, research and preparation for the possible issuance of a digital shekel aimed at creating a more efficient payments system, Bank of Israel Governor Amir Yaron said on Monday.

Yaron told a conference that the bank, similar to other central banks, had not yet decided whether it will issue digital currency and was still examining the issue. "We are committed to being at the forefront of economic and technological knowledge in this field," he said.

The Bank of Israel began to consider the possibility of issuing a central bank digital currency (CBDC) in late 2017 but a year later a team established to study the matter recommended against issuing a CBDC in the near future.

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In May the central bank said it was once again considering issuing a digital shekel.

As payment methods unrelated to the central bank's money base develop, the central bank's ability to navigate monetary policy may be impaired, Yaron said.

"Therefore, central banks have a unique role to play in preventing fragmentation and ensuring that the payment system becomes even more uniform and efficient. One way to do this is through CBDC," he said.

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Reporting by Steven Scheer Editing by Ari Rabinovitch

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