The Bank of Israel is set to launch a sandbox environment for testing central bank digital currency (CBDC) use cases. Deputy Governor Andrew Abir announced the initiative, stating that the sandbox will facilitate collaboration among financial institutions, fintech companies, and other stakeholders to develop and test innovative applications for the digital shekel.
Abir emphasized the digital shekel’s stability compared to cryptocurrencies, highlighting its similarity to physical cash in terms of being a liability of the central bank. He clarified that the digital shekel will be backed by the Bank of Israel and will maintain a stable value, unlike cryptocurrencies subject to significant fluctuations.
The digital shekel is expected to enable transactions not feasible with physical cash, such as e-commerce transactions. The Bank of Israel plans to adopt a two-tiered operational model, allowing a wide range of entities, including payment companies and fintech firms, to participate in the platform.
The announcement signals the Bank of Israel’s commitment to exploring and developing CBDC solutions, aiming to provide stability and accessibility in digital transactions while ensuring regulatory compliance and consumer protection.
