Israel Delays CBDC Launch Pending EU Decision on Digital Euro

Israel's central bank has postponed its plans to launch a CBDC until the European Union clarifies its stance on the digital Euro.

Deputy Governor Andrew Abir explained that Israel is awaiting the European Central Bank’s decision, which could pave the way for CBDC adoption globally.

Abir emphasized that Israel’s decision hinges on the actions of Western central banks, particularly the ECB, which is expected to be the first mover in this regard. He noted that many countries, including Israel, are monitoring the ECB’s progress on the digital Euro before proceeding with their own CBDC initiatives.

Regarding public adoption, Abir acknowledged the challenge of moving from theoretical use cases to actual adoption by citizens. He stressed the importance of establishing robust use cases before launching a CBDC to ensure widespread acceptance.

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In May 2024, approximately 134 countries reportedly expressed interest in CBDCs. Last year, the European Union introduced legislation for a digital currency, though it clarified that this did not commit to launching one.

Earlier in May, the Bank of Israel initiated a “Digital Shekel Challenge” to explore the adoption of a CBDC. This initiative invited applications from various sectors to test the digital currency’s core system and API layer, aiming to pave the way for future CBDC adoption in payments.

Abir highlighted that the CBDC could foster fair competition among payment providers by offering equal opportunities compared to traditional systems, with lower capital requirements and supervision.

Alexander Stefanov