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Israel Shuns Bitcoin to Embrace its own Digital Shekel

The Bank of Israel is now considering launching its own digital currency

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Israel Considering a Digital Shekel

When it comes to Bitcoin, there are two schools of thought; those who like/trust it, and those who don’t. Israel, it appears, has taken sides with the latter. Recently, its market regulator proposed a ban on companies based on Bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange (TASE). And even more recently, its central bank, the Bank of Israel made it known that it is considering issuing a digital currency to support a real-time nationwide payments system; a kind of digital shekel.

Shunning Bitcoin

According to Shmuel Hauser, the chairman of the Israel Securities Authority, “the price of Bitcoin behaves like a bubble and we don’t want investors to be subject to that volatility and uncertainty.” According to Hauser’s proposal, if a company’s main business is digital currencies, the exchange would not allow it to list.  If it is already listed, its trading will be suspended. This implies that companies such as Blockchain Mining and Fantasy Network would be the first to fall under the axe if the proposal goes through.

Two Key Drivers Behind the Move

On November 15th, the Bank of Israel has made known via a release that it “is working to enhance the competition and efficiency in the payment systems…….includes ensuring the existence of means of payment that are cash substitutes” emphasizing the need to adopt and promote an immediate payment system in the country. The paper cited examples of progress made in that area by the UK, Singapore, Poland, and Australia.

In its latest move, the bank is considering issuing its very own central bank-issued digital currency. Two main drivers behind the move are:

  1. The need for Israel to establish an immediate payment system akin to its developed market counterparts
  2. To reduce the estimated 22% of the country’s national output currently in the economy as black money.

Adding to the List…

By launching its own Digital Shekel, Israel would be:

  • following Ecuador, Tunisia, Senegal which already have their own digital currencies, and
  • joining the likes of Sweden, Dubai, Estonia, Russia, which are already working towards launching their own eKrona, EmCash, EstCoins, and CryptoRuble respectively, in the near future.
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