Reflecting an apparent change in global sentiment toward the use cases for central bank backed digital currencies, the Bank of Israel has decided to accelerate its research and preparations for a possible future launch of a digital currency.

A steering committee set up by the bank has issued a report outling the potential benefits, a draft model and issues to examine, accompanied by a public call for responses.

The draft model envisages a two-tier framework in which the central bank provides digital shekels to private sector payments providers who would then act as the interface to the general public. The bank’s plan is to provide minimal infrastructure, using either DLT or centralised ledgers, and leave it to the private sector issuers to compete on innovation.

“The draft model is the basis for a discussion and for examination of alternatives by the work teams involved in the matter at the Bank of Israel,” states the central bank. “Following the publication of this document, it will also serve as the basis for discussion within the professional community in Israel regarding the necessary characteristics of a digital shekel.”

The consultation will close on 31 July and the main findings will be published at a later date.