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Authorities want to make sure of this completely that a digital currency would have no threats over the economy anyhow.
Hong Kong Monetary Authority, the Bank of Israel and the Bank for International Settlements Innovation Hub have come along in a joint CBDC project that is on its way to get launched this year’s third quarter. For the launch of this CBDC, these authorities will have a two-tiered approach. On Friday, the Bank of Israel said that all three major banking institutions will have Central Bank Digital Currency as their main focus, due to which they will have feasibility to validate a new digital currency system.
This implies that the digital currency would have capability to get transferred to customers via financial intermediaries once issued by the country’s central bank. Project Sela will be investigating vulnerabilities and fragilities of the cybersecurity infrastructure under the BISIH Hong Kong Centre’s direction while using the established groundwork of Project Aurum in retail CBDC’s context.
The Bank of Israel said that the test will be under the protection of cyber security and following the proposed approach, there will be no financial exposure for the intermediaries directly from the clients either by storing or transferring digital money that results in minimizing the involved risk and expenses.
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Commercial banks would be responsible for distributing the central bank money among the general population. This will also be applied to digital payment systems where transferring money from one place to another exposes the intermediary institutions to involvement in the financial risk with the transaction.
This is perhaps when Israel has come closest while investigating the potential of any CBDC. In 2018, the Central Bank’s committee recommended to halt the initiative of introducing the digital shekel. As per the International Monetary Fund, Israel is among the hundred of those governments across the globe who came forward to consider issuing a Central Bank Digital Currency.
Bank of Israel’s Deputy Governor, Andrew Abir said in a statement that providing an overall effective payment system will result in increased competitiveness in the funds transfer sector, which is one of the main reasons for which the bank has come up with the issuance of an Israeli CBDC.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
