Israel’s Central Bank is Testing Digital Shekels on Ethereum Blockchain

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The Bank of Israel has adopted blockchain technology from Ethereum, the second largest in the world after Bitcoin, to investigate the issue of the digital shekel. As part of a pilot project to issue digital currency to the Bank of Israel, a team from the bank’s IT department created an experimental environment based on the Ethereum blockchain technology, and the bank issued tokens, digital shekels and digital wallets. “Imaginary digital shekels” of each other inside the Bank of Israel.

At this stage, this is not real money, just an experimental setup. The use of Ethereum takes place in a closed network and is in no way connected to the public network of Ethereum or the cryptocurrency Ether. The technology has also been used in pilot projects by the central banks of Australia, Hong Kong and Thailand. The pilot project undertaken by the bank examines the economic, business, legal and technological aspects of the move.

Globes sources for his claim have not been disclosed: The report claims that the Bank of Israel (BOI) completed its pilot project in a closed experimental environment based on the Ethereum architecture, including the issue of testing tokens representing digital shekels, and transferring them to digital wallets.

Globes also claims that as part of its trial run, BOI successfully tested its ability to program transfer of car ownership certificates with an unusable digital token (NFT) and complete transactions involving NFT payment certificates and vice versa. The transaction is straightforward, with no risk or need for a central agent or trustee.

However, the BOI published a detailed report last month outlining its analysis and investigation of various alternatives and models for future CBDCs, while stressing that the proposed CBDC model document and draft are intended only as a basis for discussion, and not as a plan. :

”This draft does not represent a decision of the Bank of Israel regarding the characteristics of the digital shekel, if issued. The draft model forms the basis for discussion and examination of alternatives by the working teams dealing with the issue at the Bank of Israel, and, following the publication of this document, it will also serve as a basis for discussion in the professional community in Israel about the characteristics required for the digital shekel.”

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