Israel to Start Digital Shekel Challenge to Develop Payment Use Cases

As a seasoned crypto investor with a keen interest in Central Bank Digital Currencies (CBDCs), I’m excited to see Israel taking significant strides towards exploring the payment use cases of its digital shekel. The announcement by the Bank of Israel regarding the Digital Shekel Challenge is a promising development that could potentially pave the way for innovative payment solutions.

The Bank of Israel has unveiled the “Digital Shekel Challenge” as part of their blueprint for potentially introducing a digital shekel, which was disclosed on Tuesday. This initiative aims to explore applications within the realm of financial transactions.

As a technical analyst, I’m here to share insights based on my expertise in the financial technology sector. The Bank of Israel recently announced the development of a technological prototype, which I’d describe as a model that mirrors the core functionality of the digital shekel system. This system is designed to offer payment-service providers an opportunity to expand their offerings and cater to the evolving needs of the public.

“For the first time in this challenge, we’re inviting financial institutions from Israel and abroad, as well as various payments system stakeholders, to collaborate closely with us in brainstorming, strategizing, and blueprinting the digital shekel.”

As a researcher studying the developments at the Bank of Israel, I can tell you that the bank is still undecided about launching a central bank digital currency (CBDC). Despite the ongoing investigation into the technology behind CBDCs, a final decision has yet to be made.

As a researcher in 2021, I participated in the pilot testing of a particular system and reported on its progress. Previously, I had been observing various situations, with a focus on the increasing usage of stablecoins. In addition, I collaborated on a project with Hong Kong and the Bank for International Settlements (BIS) to investigate methods for enhancing the security of such systems against potential cyber attacks.

The webinar serving as a platform for all your queries about the challenge will take place on June 6. Following this, there will be a series of application and presentation stages. The conclusion of these events is expected by the end of September, at which time the outcomes will be debated. A definitive date for the final meetings and the announcement of the results has yet to be determined.

As a researcher exploring the potential of application programming interfaces (APIs) in the context of a retails central bank digital currency (CBDC), I am drawn to the intriguing findings of the BIS Innovation Centre’s “Rosalind Project.” This initiative highlighted the significant role APIs can play in enabling a secure and efficient retail CBDC system, streamlining transactions and ensuring safe payments.

Saul Rejwan, managing partner at Masterkey VC, remarked, “This undertaking represents a substantial advancement for the Israeli tech scene. It could serve as a link between the web3 sector and the government, although it’s essential to note that DeFi, Zero-Knowledge technologies, and permissionless solutions are not currently under consideration.”