The Bank of Israel is reportedly considering issuing a digital currency to support an immediate nationwide payments system.
In its advent to research and foster a real-time payments system in the country, the Bank of Israel sees a central bank-issued digital currency as an option for an effective and reliable infrastructure for immediate payments. For context, the Bank of Israel published a public consultation paper [PDF] on November 15 that sought proposals for a payments infrastructure, either “centralized or distributed – that will support immediate payments in Israel.”
As Reuters reports, an anonymous Bank of Israel source has now confirmed the central bank is examining the possibility of issuing a blockchain-powered cryptocurrency for a faster payments infrastructure.
While a faster payments system, akin to the likes of the UK and Singapore (as cited by the BOI paper) is a possibility, “a central bank-issued digital currency is another form of an advanced payments system which currently does not exist,” the anonymous central bank official said.
According to the unnamed source, a digital currency issued by the central bank would be ‘centralized, safe and abide by money laundering rules’ unlike decentralized cryptocurrencies like bitcoin.
The source further added:
Central banks around the world are examining (the use of digital currencies) so we should as well.
A digital currency would also help the Israeli government reduce the amount of physical cash in circulation with an estimated 22% of the country’s national output currently in the black economy.
A number of central banks around the world are actively researching and exploring the issuance of cryptocurrencies. The most notable of these efforts sees China’s endeavor establish a digital currency research institute this year after an early successful trial, made public this year, revealed the People’s Bank of China issue its own digital currency over a blockchain. In September one PBoC researcher urged the central bank to issue a digital currency “as soon as possible”. Elsewhere, a meeting between Russian president Vladimir Putin and Moscow’s political elite in mid-October resulted in Putin calling for a state-issued cryptocurrency, tentatively dubbed the ‘cryptoruble.’
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