While the impact of central bank digital currency on commercial banks has often been seen as a source of concern, Bank of Israel deputy governor Andrew Abir took a contrarian view in a speechYears of effort to increase competition in the Israeli banking sector have paid off in a variety of ways, but “we still have a long way to go,” Abir said.
“In many countries around the world, including Israel, commercial banks do not win public popularity contests. In Israel, some of the anger directed at the banking system is the result of the need to increase the level of competition in some of the segments.”on it. Abir confidently declared that the digital shekel, which is still in its planning stages, would enjoy public support:
“The digital shekel will not be developed by some anonymous Satoshi Nakamoto. Everyone will know who is behind the digital shekel and who is responsible for it — the same Bank of Israel that stands behind the cash we all know and trust.” The introduction of a digital shekel would benefit the Bank of Israel as well, by making central bank money more readily available, for instance for use in digital payments, reversing the downward trend in central bank money use brought on by technological breakthroughs in the private sector, Abir said.Just the option to hold digital shekels could incentivize banks to pay higher interest, Abir said.