- The Bank of Israel has launched the “Digital Shekel Challenge” to develop CBDC payment solutions.
- Challenge participants will have access to a prototype system to use the innovative digital shekel.
- The Bank of Israel will host a webinar on June 9 to discuss further details.
In a significant move towards digital currency adoption, the Bank of Israel (BoI) announced the launch of the “Digital Shekel Challenge”.
The initiative aims to develop innovative payment solutions using the Digital Shekel, the Central Bank of Israel digital currency (CBDC), first reported in 2021.
This challenge, inspired by the BIS Innovation Center’s “Rosalind Project”, is an important step in the BoI’s action plan to potentially issue a digital shekel.
What is the Digital Shekel Challenge?
The Digital Shekel Challenge is designed to invite participation from a variety of organizations, including private companies, public institutions, and academic researchers.
Participants will have access to a technical prototype that simulates the core functionality of a digital shekel system with an API layer. This environment allows you to create and test real-time payment applications tailored for public use.
The challenge consists of three stages: Initially, interested parties must respond to the participation request by registering through the designated form.
Selected participants will have access to an experimental environment where they can begin developing their projects.
In the final stage, these projects will be presented to a panel of experts, who will evaluate them based on originality, innovativeness, and relevance to the Israeli economy.
The Bank of Israel is actively exploring CBDC possibilities.
BoI has been exploring the potential of CBDCs since 2017 and is accelerating its efforts in 2021.
Public consultations conducted by the bank showed significant support for digital currencies, although privacy concerns were also noted.
Digital Shekel is envisioned to provide at least the same level of privacy protection as existing digital payment methods, potentially setting a higher bar.
Internationally, BoI has participated in collaborative projects such as Project Sela with the Central Bank of Hong Kong and BIS to successfully test retail CBDC systems. These efforts aim to balance user accessibility, competition, cybersecurity, and the benefits of traditional cash.
To provide more information and answer questions, BoI will host a webinar on 9 June 2024. Participants and interested parties can register for this event to gain additional insight into the challenge.
The Digital Shekel Challenge represents a bold move toward modernizing Israel’s payments infrastructure, with the goal of leveraging cutting-edge technologies to increase efficiency and foster innovation in the financial sector.
Bank of Israel Deputy Governor Andrew Abir emphasized the importance of cooperation for the success of the digital shekel.
Abir said: “The Digital Shekel Challenge is another step towards the future of payments, aiming to create an innovative and competitive ecosystem.”
The Deputy Governor emphasized that the Digital Shekel initiative will foster cooperation between central banks, the financial industry and other stakeholders at home and abroad.