The Bank of Israel is in high gear, mapping out strategies to pump up the uptake of its controversial central bank digital currency (CBDC) as it mulls over the possibility of an official roll-out. The big picture: the central bank is banking on the digital shekel to be a game changer in the financial ecosystem.
The problem: Like with all CBDCs, the creation of a centrally controlled system would mean more government control and could lead to increased surveillance.
The Game Plan for Users: What’s on the table? A host of incentives to entice the public. The Bank of Israel is weighing options such as letting citizens rake in salaries, square fines, and remit taxes using the digital shekel. Another prong in the strategy is the creation of a “network effect” through the non-stop availability of the digital shekel platform.
Multipurpose Use Cases: The utility doesn’t end there. The digital shekel is poised to flex its muscles in programmable payments, micropayments, and the burgeoning world of decentralized finance.
“The broad use of a digital shekel as a means of payment between individuals (P2P) would contribute to the creation of a network effect,” the bank’s report underlines. “This network effect will lead to positive external effects in the use of a digital shekel, such that its use by a greater number of users would on its own lead to broader distribution among the public.”
Merchant Angle: For the business crowd, the central bank is looking at trimming the costs of using the digital shekel to make it more appealing than other options. That’s not all – it’s also thinking about axing manual tax filings to make the payment process silky smooth.
Cross-Border Ambitions: There’s an international flavor too. The Bank of Israel is keen on leveraging its CBDC to grease the wheels for cross-border payments, an area that’s often bogged down by hiccups and snail-paced processing.
