Bank of Israel Proposes Design for Future Central Bank Digital Currency

The Bank of Israel has proposed a preliminary design for a central bank digital currency (CBDC), referred to as the digital shekel (DS). This multipurpose CBDC aims to serve both retail and wholesale needs, providing a digital equivalent to cash while modernizing the financial settlement system. The proposal outlines features such as programmability and composability for improved functionality. However, the bank has clarified that no final decision has been made regarding the issuance of the DS, and the design should be regarded as tentative. The move follows a broader trend among developed economies exploring the potential of CBDCs to enhance financial inclusion and prepare for the declining use of cash. Nevertheless, critics view these initiatives with skepticism, fearing increased state control over monetary transactions.