Israel to Launch an Interest-bearing Shekel Digital Currency
The central bank of Israel has announced plans to support a new digital version of the Israeli shekel, which could potentially offer interest-bearing options.
In a statement released on March 11, the Bank of Israel explained that this digital currency would operate through a two-tier model, providing instant and 24/7 payments, as well as the capability for offline use and limitations on balances.
However, the central bank clarified that it would not have access to any personally identifiable information about end users’ balances or transactions.
Currently, commercial banks in Israel offer 4.86% interest on fiat shekel deposits and savings, but the shekel CBDC would not be interest-bearing when held by banks as part of their short-term liquidity reserves.
The central bank stated that the digital shekel’s data structure must comply with all defined assumptions, including the ability to enforce holding restrictions and apply interest if necessary.
