A Bank of Israel executive on Tuesday squashed budding hopes for the introduction of a digital shekel, stressing that Israel has no plans to become the first developed country to issue a national digital currency.
Dr. Sigal Ribon, the Head of the Monetary Policy Division at the Bank of Israel, spoke at the annual cryptocurrency summit of the Israeli crypto exchange Bit2C.
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According to Ribon, we are far from seeing a national crypto coin in Israel. “We do not recommend to issue a digital Shekel any time soon,” said Ribon. “No developed country has yet to issue a national digital currency,” she added.
“Another reason is the relative lack of technological structure in Israel. We have prominent startups and entrepreneurs, but our basic infrastructure is far from able to facilitate that.”
Do we really need blockchain for that?
Ribon presented a somewhat crypto-skeptic vision of the Israeli Central Bank and even doubted the applicability of blockchain in several aspects of the financial industry.
“We see value in allowing people to perform transactions without intermediaries (similar to cash money). However, the use of physical cash in Israeli society is still very widespread, so we don’t see it an urgency to provide a digital alternative to that.”
“Another reason for issuing a digital currency is digitizing and streamlining micropayments. But we see other, non-DLT based services, that give you the same thing. So, the advantage of blockchain is not clear here.”
A monetary tool
On the other hand, she mentioned that blockchain technology, and more specifically a national crypto coin, can be relevant in promoting national monetary policy.
“Blockchain can be a monetary tool. For instance, it can serve as a good scheme for a universal basic income (helicopter money), or other Quantitive Easing policies.”
“On the other hand, it might nullify the Central Bank’s ability to impose negative interest on the Shekel. Once you don’t have to store your money in the bank, why should you pay interest for it?”
She views privacy as a positive aspect of the crypto economy. However, she believes that one must remain modest and cautious in the ways to implement it on the national level.
“We also see value in allowing a certain level of privacy. But in no way will the digital shekel be anonymous. As a government body, we’re obligated to adhere to basic KYC requirements.”
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