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The Bank of Israel in a recent announcement declared that it has collaborated on a trial with the Hong Kong authority. It will assess the latest digital currency against cyber security risks among other tests.
In a statement, it revealed that the joint project will begin in the third semester and will be using a two-tier central bank digital currency (CBDC). The central bank will issue it and financial intermediaries such as banks will perform its distribution.
Israel abandoned its original attempt in 2018 after a panel assembled by the central bank advised against releasing a digital version of the shekel. Israel is again, in fits and turns, returning to the idea of a CBDC.
Central banks are at different stages of developing digital currencies.
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Analysts at Bank of America Corp. have put forward the argument that the central banks will inevitably release their own digital coins to mitigate the risk of losing monetary control to decentralized cryptocurrencies or widely adopted digital currencies such as a digital dollar.
Israel and Hong Kong are testing the retail CBDC which is designed to enable the intermediaries to handle it with no financial exposure to their customers and will check if this makes it less vulnerable to cyber attacks.
In a statement, the Bank of Israel said that the “exposure-free” CBDC is expected to have more liquidity, lower costs, wider access, increased competition, and less financial risk for the customer.”
The innovation unit of the Bank for International Settlements will also participate in the trial.
Despite the fact that research into digital currency is still in its infancy, the International Monetary Fund reports that nations all around the world are either launching CBDCs. However, China is currently in the lead since it has already been put to the test by about 140 million people, including spectators at the most recent Winter Olympics in Beijing.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
