The Bank of Israel has initiated an experiment to develop its central bank digital currency (CBDC), the digital shekel, inspired by Project Rosalind from the BIS Innovation Hub.
The Bank of Israel (BoI) aims to accelerate the creation of an advanced digital payments ecosystem centered around the digital shekel. In their announcement, the central bank stated:
“As part of the action plan for the possible issuance of the digital shekel, the Bank of Israel is planning the ‘Digital Shekel Challenge’—an experiment inspired by the ‘Project Rosalind’ carried out by the BIS Innovation Hub.”
Project Rosalind, a collaboration between the Bank for International Settlements (BIS) and the Bank of England, focuses on developing prototypes for application programming interfaces (APIs) for CBDCs.
The BoI’s challenge will provide a sandbox environment with API layers for participants to develop real-time CBDC payment systems for the public. The competition will unfold in three phases: application and presentations, access to the network for selected projects, and a final presentation to judges.
Shauli Rejwan, managing partner at Masterkey Venture Capital in Tel Aviv, elaborated on the initiative, highlighting its potential to bridge the gap between the Web3 industry and government sectors, even though decentralized finance and permissionless solutions are not yet included.
The BoI has invited entities from the private, public, and academic sectors to participate, prioritizing innovative and original payment applications. These can include improvements to existing applications or entirely new solutions.
While CBDCs are designed for broad use, participants in Israel’s CBDC experiment are encouraged to create solutions tailored to specific niches and scenarios, fostering a versatile and innovative approach to digital payments.
Summary Review: The Bank of Israel’s launch of the digital shekel CBDC experiment marks a significant step in developing a modern digital payments ecosystem. By drawing inspiration from Project Rosalind and involving various service providers, Israel aims to foster innovation and bridge the gap between the Web3 industry and government sectors. This initiative not only underscores the country’s commitment to advancing financial technology but also highlights the global trend towards integrating CBDCs into everyday transactions. As Israel prioritizes originality and innovation in its CBDC applications, the experiment could set a precedent for other nations exploring the potential of digital currencies in transforming payment systems.
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