Global blockchain supervision and query platform

English
Download

Israeli central bank official says CBDC competition with banks is good for economy

Israeli central bank official says CBDC competition with banks is good for economy WikiBit 2024-04-17 03:59

Bank of Israel deputy governor Andrew Abir described how he saw a central bank digital currency impacting commercial banks in Israel to the benefit of the public.

Bank of Israel deputy governor Andrew Abir is eager for the digital shekel to shake up commercial banks.

While the impact of central bank digital currency (CBDC) 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 speech published on the central banks website. Let the banks scramble to compete, he said, in essence.

Years 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. As the Bank of Israel raised interest rates to combat inflation, banks raised interest rates on credit, but the rise in deposit rates was “partial and slow.” He added:

“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.”

The design of the digital shekel includes an option to pay interest 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. Thus the digital shekel would give the central bank a mechanism to influence the degree of transmission of central bank interest rates.

The digital shekel reportedly has strong support among the Israeli public.

Disclaimer:

The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.

  • Token conversion
  • Exchange rate conversion
  • Calculation for foreign exchange purchasing
/
PC(S)
Current Rate
Available

0.00