Central Bank Official in Israel Embraces Competition with Banks for Economic Growth Through CBDCs

Israeli central bank official, Andrew Abir, believes that the introduction of the digital shekel will spark technological advancements and foster competition in the banking sector. He recognizes the ongoing efforts to enhance competition in the Israeli banking industry but acknowledges that there is still a long way to go. Abir points out that public sentiment towards commercial banks in Israel is not always positive, and some of the dissatisfaction arises from the need to improve competition in certain sectors.
The digital shekel, which is currently in the planning phase, will include an option for paying interest. Abir assures the public that the digital shekel will be developed by the Bank of Israel, a reliable institution supporting the traditional cash system. He emphasizes that unlike Satoshi Nakamoto, the pseudonymous creator of Bitcoin, the digital shekel will be created by a transparent and accountable central bank.
Abir also highlights the benefits of introducing a digital shekel for the Bank of Israel. It would provide the central bank with increased access to central bank money, making it easier to use in digital payments. This would counteract the declining trend in central bank money usage due to advances in the private sector. Furthermore, the digital shekel could prompt commercial banks to offer higher interest rates to customers, as holding digital shekels would promote competition.
The digital shekel has received strong support from the Israeli public, signaling a favorable response to the potential benefits it offers. The introduction of a CBDC like the digital shekel is viewed as a step towards boosting competition in the financial system, driving innovation, and ultimately benefiting the Israeli economy.
As the Bank of Israel continues to develop the digital shekel, its goal is to create a reliable and efficient digital currency aligned with the country’s financial objectives. With the backing of central bank officials like Andrew Abir, the digital shekel has the potential to transform the Israeli banking industry and pave the way for a more competitive and technologically advanced financial system.
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