22 Jun 2021 Samantha McLauren
Israel Tests CBDC Amid Further Regulatory Scrutiny
Central banks around the world are putting their efforts into the research and development of central bank-issued digital currencies, or CBDCs, as Israel joined France, Canada, and China with CBDC pilot programs.
Andrew Abir, the Deputy Governor of the Bank of Israel, announced that Israel’s central bank already started an internal pilot program for a digital shekel at a recent conference.
The idea behind the digital shekel isn’t new – the first proposal dates back to 2017. However, Israel decided to put the development of its CBDC project into high gear. Indeed, one of the main topics of the Fair Value Forum of IDC Herzliya was the digital shekel and its possible effects on the financial sector, and Abir, whether unintentional or not, stated that the Bank of Israel had already run a digital currency pilot.
However, Abir clarified that the pilot program does not necessarily mean he is into the CBDC project.
“I had previously estimated that the chance of having a CBDC within five years is 20%,” Abir noted, emphasizing the optimistic development of the sector.
Indeed, analysts suggest that 80% of the world’s central banks are considering CBDCs as an option to a certain extent. Many of the central banks are still in the pre-planning stages, while only a few have moved to the testing stage. Currently, only the Bahamas and Cambodia have officially launched digital currencies, while China set its eyes on launching its CBDC project for the 2022 Beijing Winter Olympics. Furthermore, the Chinese government pushed out millions of dollars in digital yuan to citizens in the Chengdu, Suzhou, and Beijing provinces.
Sweden joins the list of countries, conducting CBDC research and development with their e-krona project. Currently, the e-krona is in a test phase, and the goal is to determine how well the e-krona can be implemented in both commercial and retail operations.
Meanwhile, bank regulators listed possible risks to financial stability if banks decide to go into the crypto realm. The Basel Committee on Banking Supervision, for example, announced on June 10 that it is planning to put Bitcoin, among other cryptocurrencies and crypto-related products, to the toughest capital requirements for any bank that wants to hold it.
However, banking giants seem to be disapproving of the regulation tightening. Goldman’s chief executive David Solomon noted that the bank is restricted by regulations from acting as a principal trader in cryptocurrencies or from crypto owning.
“We do clear Bitcoin futures, we provide advice to clients, particularly institutions, and high net worth individuals that have an interest in gaining exposure, although often they go to other places to gain those exposures,” Solomon added.Bitcoin cryptocurrency mining mining central banks Bitcoin mining Bitcoin price china cryptocurrencies bank bitcoin news cryptocurrency news crypto news CBDC