Israel exploring digital currency for faster payments
The Bank of Israel is reportedly looking at issuing a digital currency as a means of creating a faster payments system, according to a Reuters news report.
Despite no final decision being made, the government is ready to legislate or include the issue in its 2019 budget and economic package if the central bank gives the green light.
With the rise of Bitcoin, and other digital currencies such as Ripple’s XRP, economists speculate that these might be rolled out across entire economies if created by central banks.
If its investigations are successful, the Bank of Israel intends to launch a centralised and safe digital currency, one which would comply with money laundering rules, but nothing is guaranteed yet.
Digital currencies allow parties to transact payments directly, without any intermediaries, by using blockchain distributed ledger technology (DLT), which allows for the settlement of transactions in a matter of minutes. As reported by CNBC in early 2017, however, the Bank of Canada (BoC) was exploring the same options as Israel but has ultimately said no to using blockchain at this early stage of its development.
Regardless, the Bank of Israel wants to explore the area itself. It recently published a public consultation around the creation of an infrastructure that would support instant payments (IP), such as the ones used by many European nations, and is obviously looking at all technology options.
Meanwhile, in the UK, Mark Carney, Governor of the Bank of England (BoE), has said previously in public that there are “fundamental problems” with the idea of a digital currency issued by a central bank and based on DLT that could be used by the public. If these resiliency, security and other perceived problems can be overcome long-term is what central bankers worldwide must consider.