In an effort to expedite payment processing systems, the Bank of Israel is thinking of implementing a digital currency. This will assist banks in reducing the amount of cash flowing in the economy. However, there is no clarity on whether a firm decision has been taken or not.
According to one source, the government was eager to include this in the 2019 budget and economic package, once they get a go-ahead from the central bank.
Ever since the market has seen crypto-currencies like bitcoin, economists have predicted that technology can be leveraged at a global scale by issuing digital currencies created by central banks.
However, in contrast to bitcoin and other crypto currencies, the digital currency issued by Bank of Israel will remain with the bank, protecting it from any money laundering activities.
The benefit of crypto currency is that it allows people to undertake a transaction without any central mediator. This is done by using blockchain technology, which works on a shared ledger model to verify records and complete transaction within minutes.
The Israeli government has been striving to reduce the cash flow in the economy for quite some time. A major reason is the amount of black money that is prevalent in the market – to the tune of 22 percent.
Last month, the Bank of Israel had sought out proposals to create one infrastructure that will ensure faster payments in Israel; something similar to the ones used in Britain and Sweden.
The anonymous source commented, “A fast payments system is one option, while a central bank- issued digital currency is another form of an advanced payments system which currently does not exist.”
The Bank of Israel was not available to comment on this at this point in time.