Israel’s central bank authority, CBCC, is good for the economy if it competes with banks.
While the impact of the Central Bank Digital Currency (CBCC) on commercial banks is often seen as a concern, Bank of Israel Deputy Governor Andrew Abir expressed the opposite opinion in a speech on the Central Bank's website. Basically, he says, the banks are racing to compete.
While years of efforts to increase competition in Israel's banking sector have paid off in several ways, “we still have a long way to go,” Abir said. As the Bank of Israel raised interest rates to fight inflation, banks raised interest rates on loans, but the increase in deposit rates was “partial and slow.” He added:
“In many countries of the world, including Israel, commercial banks do not win the popularity contest. […] In Israel, some of the anger at the banking system is a result of the need to increase competition in some quarters.
The design of the digital wallet includes the option of paying interest on it. Abir is confident that the digital shekel, which is still in the planning stages, will gain public support.
“The digital download is not produced by the anonymous Satoshi Nakamoto. Everyone knows who is behind the digital upload and who is responsible – […] The bank of Israel that stands behind the cash we all know and trust.
The introduction of the digital shekel will also benefit the Bank of Israel, making central bank money more readily available, for example for use in digital payments, reversing the downward trend in the use of central bank money brought on by technological breakthroughs in the private sector. Abir said.
RELATED: Central Bank of Israel Says CBDC May Be Issued if Stablecoin Use Increases
The mere option to hold digital shekels may encourage banks to charge higher interest rates, Abeer said. Therefore, digital currency provides a mechanism for the central bank to influence the level of the central bank's interest rate spread.
The digital shekel is said to have strong support among the Israeli public.
Magazine: Terrorism and the Israel-Gaza War Are Armed to Destroy Crypto.
