BANK OF ISRAEL CLAIMS PUBLIC SUPPORT FOR ITS CBDC PROJECT

Last updated: June 19, 2025, 21:28 | Written by: Arthur Hayes

The Bank of Israel believes it has found a significant level of public backing for its ambitious project to launch a Central Bank Digital Currency (CBDC), known as the digital shekel.This initiative, first considered in late 2025, aims to revolutionize the country's financial landscape by introducing a digital form of currency akin to physical cash but existing in the digital realm.While the journey has seen its share of hesitations and revisions – even a recommendation to halt the project temporarily – the Bank of Israel revived the idea with renewed vigor in May 2025, signaling its commitment to exploring the potential benefits and ramifications of a CBDC. At the end of 2025, the digital shekel project reached a significant milestone with the completion of a high-level design for the DS. The design document is being published today to receive feedback from the public and the professional community regarding the key features planned for the digital shekel system.The central bank's recent summary of public consultations reveals predominantly positive feedback, despite stakeholders holding differing views on critical aspects like privacy and interest-bearing features. The Bank of Israel had the previous month (March) published a 41-page document titled Logical Architecture for the Digital Shekel System that stated that it would support the option for the central bank to have the digital shekel bear interest . A CBDC paying interest would be a different approach from many other jurisdictions.But what exactly is fueling this apparent support, and what challenges still lie ahead for the digital shekel?Let's delve into the details of this groundbreaking project and understand why the Bank of Israel is optimistic about its future.

Understanding the Digital Shekel: Israel's CBDC Initiative

A Central Bank Digital Currency (CBDC) is essentially a digital form of a nation's fiat currency, issued and regulated by the central bank. As a Central Bank Digital Currency (CBDC), the digital shekel would sit alongside physical cash and bank accounts, accessible to the general public, businesses, and various organisations. It is anticipated to enhance competition within the payments market, foster the development of innovative payment use cases, and strengthen the resilience ofIn Israel's case, this is the digital shekel. Although it still hasn t made a final decision on the launch of the digital shekel, the Central Bank of Israel reported that public feedback on the project has been mostly positive. On May 9, the Bank of Israel summarized the results of a public consultation on its plans for a central bank digital currency (CBDC), Reuters reported.Think of it as a digital version of the physical shekel coins and banknotes you might carry in your wallet, but existing and transacting electronically. Bank of Israel claims 'public support' for its CBDC project Despite the fact that it still hasn't made a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on theThe Bank of Israel envisions the digital shekel as a complement to existing forms of money, not a replacement. Despite the fact that it still didn t make a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on the project is mainly positive. According to Reuters, on May 9, The Bank of Israel summarized the results of the public consultation on its central bank digital currency (CBDCThis means it would coexist with physical cash, bank accounts, and other digital payment methods.

The main goals behind the digital shekel are to:

Enhance competition in the payments market.
Foster innovation in the development of new payment use cases.
Strengthen the resilience and efficiency of the payment system.
Reduce the reliance on physical cash, which can be costly and inefficient to manage.
Combat illicit financial activities.

It's important to note that the digital shekel project has been a journey of exploration and adaptation.After initial consideration in late 2025, a research team recommended putting the project on hold. Bank of Israel claims 'public support' for its CBDC project Bank CBDC Claims Israel project public support CryptonewsHowever, the Bank of Israel relaunched the initiative in May 2025 and accelerated its research in November 2025.This shows a commitment to adapting to evolving technological landscapes and understanding the potential benefits of a CBDC.

The Public Consultation: Gauging Sentiment on the Digital Shekel

To ensure the digital shekel project aligns with the needs and concerns of the public and relevant stakeholders, the Bank of Israel initiated a public consultation.This involved soliciting feedback on various aspects of the proposed CBDC, including its design, functionality, and potential impact on the economy.According to Reuters, the Bank of Israel summarized the results of this consultation on May 9th, reporting that public feedback has been ""mainly positive.""

The consultation received 33 responses from diverse sectors, highlighting significant interest in the project.A notable aspect is the international engagement, with half of the responses originating from abroad, indicating a global interest in Israel's CBDC endeavors. Despite the fact that it still hasn t made a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on the project is mainly positive. According to Reuters, on Monday, The Bank of Israel summarized the results of the public consultation on its central bank digital currency (CBDCDomestically, the fintech community showed considerable involvement, contributing 17 responses.

The positive reception underscores a general optimism regarding the potential benefits of a digital shekel. Nonetheless, he feels that bringing crypto to the public must begin with some institutional and governmental participation. The central bank examined the CBDC initiative for the first time in late 2025. Although the study committee recommended that the program be placed on hold for the time being, the Bank of Israel relaunched it in May 2025.The public seems to recognize the potential for increased efficiency, innovation, and competition within the financial sector. Despite the fact that it still didn t make a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on the project is mainly positive. According to Reuters, on May 9, The Bank of Israel summarized the results of the public consultation on its central bank digital currency (CBDC) plans.However, the consultation also revealed key areas of concern, particularly regarding privacy and the potential impact of an interest-bearing CBDC.

Key Findings from the Public Consultation

The public consultation shed light on several key areas of interest and concern.Let's examine some of the most important findings:

Support for Increased Competition

A significant number of stakeholders believe that the digital shekel has the potential to boost competition within the payments market. The CBDC project was first considered by the central bank at the end of 2025. A year later, the research team recommended halting the project for the near future, but in May 2025, the Bank ofThis is crucial because a more competitive landscape can lead to lower transaction fees, improved services, and greater innovation. Bank of Israel claims public support for its CBDC projectSource: CointelegraphPublished onThe digital shekel could provide a viable alternative to existing payment methods, forcing established players to up their game.

For example, smaller businesses that currently face high transaction fees from credit card companies could benefit from the lower costs associated with using the digital shekel.This could improve their profitability and allow them to offer more competitive prices to consumers.

Divisions on Privacy Concerns

Privacy is a major concern for many people when it comes to digital currencies. Stakeholders believe that the digital shekel would boost competition, but remain divided on the matter of privacy. Despite the fact that it still hasn t made a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on the project is mainly positive.The public consultation revealed divided opinions on this matter. The CBDC project was first considered by the central bank at the end of 2025. A year later, the research team recommended halting the project for the near future, but in May 2025, the Bank of Israel revived the idea. In November 2025, it said it would accelerate the research.Some stakeholders believe that the digital shekel should offer a high degree of privacy, similar to physical cash. Stakeholders believe that the digital shekel would boost competition, but remain divided on the matter of privacy.Continue reading Bank of Israel claims 'public support' for its CBDCThey worry that the central bank or other authorities could potentially track transactions and monitor financial activity. According to Reuters, on Monday, The Bank of Israel summarized the results of the public consultation on its central bank digital currency (CBDC) plans. It has received 33 responses from different sectors, with half of them coming from abroad and 17 from the domestic fintech community.Others argue that some level of transparency is necessary to combat illicit activities and ensure the integrity of the financial system.

Finding the right balance between privacy and transparency will be a crucial challenge for the Bank of Israel.They need to design the digital shekel in a way that protects users' privacy while also preventing its use for money laundering or other illegal purposes.

Interest-Bearing CBDC: A Novel Approach

The Bank of Israel has considered the option of having the digital shekel bear interest. A Central Bank Digital Currency (CBDC) is a digital form of currency issued by a central bank, akin to physical cash in the form of notes and coins. In light of technological advancements, evolving consumer habits, and the transition to digital payments, the Bank of Israel is currently exploring the potential implications and ramifications ofThis would be a different approach from many other jurisdictions, where CBDCs are typically non-interest-bearing.A digital shekel that pays interest could have several implications.

On one hand, it could make the digital shekel more attractive to users, as they could earn a return on their holdings. Digital Shekel would be presumably welcome according to a recent consultation from Israel's Central Bank. The institution received feedback from different international and domestic fintech sectors.This could encourage wider adoption and usage.On the other hand, it could potentially disrupt the banking sector by drawing deposits away from commercial banks. JPEX staff flee event as scandal hits, Mt. Gox woes, Diners Club crypto: Asia ExpressThis is because people might prefer to hold their funds in the digital shekel, which would offer a risk-free return.

The Bank of Israel published a 41-page document titled ""Logical Architecture for the Digital Shekel System"" in March, indicating that it would support the option for the central bank to have the digital shekel bear interest.

Project Sela: Feasibility and Cybersecurity

Project Sela, a collaborative effort involving the Bank for International Settlements (BIS) and the central banks of Hong Kong SAR and Israel, has demonstrated the feasibility of a retail central bank digital currency (rCBDC) ecosystem.This experiment focused on combining accessibility, competition, and preventative cybersecurity, while retaining key advantages of physical cash.Project Sela confirms it is possible to achieve key benefits, such as secure data, when leveraging new technologies and cooperation.

The Technological Architecture of the Digital Shekel

Understanding the underlying technology is crucial for grasping the potential of the digital shekel. The Bank of Israel claims that the nation's blockchain sector supports its CBDC project.The Bank of Israel has been actively developing and refining the technological architecture of the digital shekel system.

High-Level Design Completion

A significant milestone was reached at the end of 2025 with the completion of a high-level design for the digital shekel.This design document outlines the key features and functionalities planned for the system. Walmart-Owned Sam s Club Raises Hourly Wage for 100,000 SeptemThe Bank of Israel has made this document publicly available to solicit feedback from the public and the professional community.

Accessibility and Interoperability

The design emphasizes accessibility, ensuring that the digital shekel is available to a wide range of users, including individuals, businesses, and organizations.It will exist alongside physical cash and bank accounts, providing a seamless and integrated payment experience.

Interoperability is another critical aspect. Project Sela, a joint experiment by the Bank for International Settlements (BIS) and the central banks of Hong Kong SAR and Israel, has proven the feasibility of a retail central bank digital currency (rCBDC) ecosystem that combines accessibility, competition and preventative cyber security, while retaining key advantages of physical cash.The digital shekel system needs to be compatible with existing payment infrastructure and systems.This will allow users to easily transfer funds between different platforms and institutions.

Security and Resilience

Security is paramount when it comes to digital currencies.The Bank of Israel is prioritizing the development of a secure and resilient digital shekel system. Despite the fact that it still hasn t made a final decision on the launch of the digital shekel, Israel s central bank reported that the public feedback on the project is mainly positive. According to Reuters, on Monday, The Bank of Israel summarized the results of the public consultation on its central bank digital currency (CBDC) plans.This involves implementing robust cybersecurity measures to protect against fraud, hacking, and other threats.

The system also needs to be designed to withstand technical failures and disruptions.This requires redundancy and backup systems to ensure that the digital shekel remains available even in the event of an outage.

Addressing Concerns and Challenges

While the Bank of Israel reports positive public feedback, it's crucial to address the concerns and challenges that remain.These include:

Privacy: As mentioned earlier, privacy is a major concern.The Bank of Israel needs to find a way to balance the need for transparency with the public's desire for privacy.This could involve using technologies like zero-knowledge proofs to allow transactions to be verified without revealing sensitive information.
Security: Ensuring the security of the digital shekel system is critical.This requires ongoing investment in cybersecurity and collaboration with experts to identify and address potential vulnerabilities.
Financial Stability: The introduction of a digital shekel could have implications for financial stability.The Bank of Israel needs to carefully monitor the impact of the digital shekel on the banking sector and take steps to mitigate any potential risks.
Financial Inclusion: The digital shekel has the potential to improve financial inclusion by providing access to digital payments for people who are currently unbanked or underbanked.However, the Bank of Israel needs to ensure that the digital shekel is accessible to everyone, regardless of their income, location, or technological literacy.
Adoption: Even if the digital shekel is well-designed and addresses all the concerns, it will only be successful if people actually use it.The Bank of Israel needs to develop a strategy to promote adoption and encourage people to switch from physical cash to the digital shekel.

Examples of Potential Use Cases for the Digital Shekel

To better understand the potential impact of the digital shekel, let's consider some specific use cases:

Everyday Purchases: Imagine paying for your groceries or a cup of coffee using the digital shekel.Transactions would be fast, secure, and convenient, eliminating the need for physical cash or credit cards.
Government Payments: The government could use the digital shekel to distribute social welfare benefits, tax refunds, or other payments.This could be more efficient and transparent than traditional methods.
Cross-Border Payments: The digital shekel could facilitate cross-border payments, making it easier and cheaper for businesses and individuals to send and receive money internationally.
Micropayments: The digital shekel could enable micropayments, allowing people to pay small amounts for online content or services.This could open up new opportunities for content creators and businesses.
Smart Contracts: The digital shekel could be integrated with smart contracts, enabling automated and secure transactions.This could be used for a wide range of applications, such as supply chain management and insurance.

The Future of the Digital Shekel in Israel

The Bank of Israel's claim of ""public support"" for its CBDC project is a positive sign, but it is important to remember that this is still a work in progress.The Bank of Israel has not yet made a final decision on whether to launch the digital shekel.However, the positive feedback from the public consultation suggests that the project is moving in the right direction.

The digital shekel has the potential to transform Israel's financial landscape, but its success will depend on addressing the concerns and challenges that remain.The Bank of Israel needs to prioritize privacy, security, and financial stability, and it needs to develop a strategy to promote adoption and ensure that the digital shekel is accessible to everyone.

Despite these challenges, the digital shekel holds considerable promise.If successful, it could enhance competition, foster innovation, and improve the efficiency and resilience of Israel's payment system.

What are the potential benefits of the Digital Shekel to citizens?

The digital shekel has a lot of benefits, including

Faster and cheaper transactions, especially cross-border payments.
Improved security and transparency compared to physical cash.
Greater financial inclusion for people who are unbanked or underbanked.
New opportunities for innovation in the financial sector.

What are the potential risks of the Digital Shekel to citizens?

The digital shekel has some risks that the Bank of Israel needs to mitigate.These risks include:

Privacy concerns related to the collection and use of transaction data.
Security risks associated with hacking and cybercrime.
Financial stability risks if people shift their funds to the digital shekel.
Exclusion of people who lack access to technology or financial literacy.

Conclusion: Key Takeaways and the Path Forward

The Bank of Israel's exploration of a CBDC, the digital shekel, is a bold initiative with the potential to reshape the nation's financial landscape.The positive public feedback from the consultation is encouraging, indicating a willingness to embrace digital innovation.However, the journey is far from over.

Key Takeaways:

The Bank of Israel believes it has public support for its CBDC project, the digital shekel.
The public consultation revealed a general optimism about the potential benefits of a digital shekel, particularly in terms of increased competition and innovation.
Privacy remains a significant concern, and the Bank of Israel needs to find a way to balance transparency with the public's desire for privacy.
The Bank of Israel is considering an interest-bearing digital shekel, which could have implications for the banking sector.
Security, financial stability, and financial inclusion are critical challenges that need to be addressed.

The path forward requires careful consideration of these challenges, along with continued dialogue with stakeholders, to ensure that the digital shekel is designed and implemented in a way that benefits all Israelis.The Bank of Israel must now focus on detailed planning, robust security measures, and clear communication with the public to ensure a successful launch.If these steps are taken, the digital shekel can usher in a new era of financial innovation and inclusion for Israel.

Are you ready for the digital shekel?Stay informed and participate in future consultations to help shape the future of finance in Israel.