The Bank of Israel has released a document on how to manufacture acceptance of Central Bank Digital Currencies (CBDCs).

The blueprint lays out how a digital shekel could be legitimized by a “network effect.” 

The State of Israel would have to offer tax refunds, benefits, and wages in the digital currency, as well as accept payments of fines, fees, and taxes. 

According to the Bank of Israel, state endorsement of the currency would create a ripple effect that encourages citizens and businesses to adopt the digital shekel.

“Like many other central banks, the Bank of Israel is in the process of building a work plan so that it can be prepared to issue central bank digital currency (CBDC) should it be decided to do so,” the press release states. 

It adds, “A digital shekel would have the potential to become an important means of payment in the Israeli economy, but in order for that to happen, it is necessary to create a broad user base.”

The Bank states that lower transaction fees could incentivize businesses to adopt CBDCs for their financial transactions.

Defining CBDCs as “legal tender” is also examined within the strategy, offering potential advantages in terms of perceived legitimacy and broader acceptance. 

Furthermore, the strategy delves into the realm of cross-border payments. The potential for reduced costs and enhanced efficiency in international transactions, the document states, could position CBDCs as a viable option for global financial exchanges.

The Bank of Israel has indicated that it will introduce CBDCs if the US and/ or Europe decides to do so as well. 

The Bank of Canada is making preparations to supply a digital Canadian dollar, and noted the CBDC “would not replace cash—we will continue to supply bank notes as long as Canadians want to use them.”

“Ultimately, Parliament and the Government of Canada will determine if or when to issue a digital Canadian dollar,” the Bank stated.

“There may come a time when cash is not widely accepted in day-to-day transactions.”