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Bank of Israel Decides Against Digital Currency

The Bank of Israel has decided against issuing a Central Bank Digital Currency (CBDC) after a study group recommended the same measure. The move comes after extensive efforts by the national regulator to study cryptocurrencies and DLT.

The study was performed by a joint team set up by the governor of the Bank of Israel to examine the issue of CBDCs. It has only recently completed its report and submitted it to the bank.

According to the report: “The team does not recommend that the Bank of Israel issue digital currency in the near future. It is necessary to continue examining the field and to follow developments around the world before there are proper grounds for a decision to recommend issuing digital currency.”

The opinion comes as little surprise, given that CBDCs are being widely discredited around the world by financial watchdogs and central banks because of their perceived incompatibility with the fiat cash-based system.

Bank of Japan also raised doubts about the operation of CBDCs and their potential place in the current system. The European Union also announced earlier this year that the conditions were not suitable for CBDCs in the environment the continuing popularity of hard cash and lack of serious risk assessment.

While other banks like People’s Bank of China (PBoC) and Venezuelan Central Bank are seen as in favor of CBDCs, no major country except Venezuela has announced the development of a CBDC. Canadian and Swedish Central Banks are also reportedly looking into the technology with interest.

 

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Global State Bank Crypto Adoption Still in Its Infancy

With banks increasingly switching on to the current global interest in cryptocurrencies, digital currencies are now being utilized by the same institutions they were designed to subvert, writes Cointelegraph.

More and more banks around the world see blockchain as a panacea to banking issues, all long overdue for improvement and update. They are realizing that, due to today’s already digitalized banking, which has changed the nature of payment and storage of monies, the technology behind Bitcoin clearly has a place within global financial systems.

Only a fraction of money is paper money bills in circulation, and current digital systems lack speed, stability and security. This, coupled with customer demand, as in the case of Goldman Sachs’s adoption of a digital dollar recently, is driving many nations to consider or actively support central bank cryptocurrency.

Governments and central banks from India, Japan, Canada, Russia, Switzerland to Singapore and the Marshall Islands are all currently looking into a government-backed digital currency. Several other governments, including China, Estonia, and Iran, have discussed plans for their own digital currency. Of these, the Marshall Islands have taken one step further and plan to issue its own cryptocurrency that will be circulated as legal tender along with the US dollar.

Singapore has project UBIN and the Bank of Canada has Project Jasper, while the United States is toying with the idea of a FedCoin. Last year, in the Middle East, the Bank of Israel was considering a digital Shekel.

In Sweden, many retail stores no longer accept paper money and some Swedish bank branches no longer disburse or collect cash. In response, the Riksbank has a current project in progress examining the viability of an e-Krona for retail payments.

Crypto-friendly Switzerland is looking towards the viability of a Swiss National Bank (SNB) e-Franc, but has little support within the Swiss government. The often controversial Venezuelan Petro, seen as both an economy saver and possible sanction breaker, was launched in February 2018 to supplement the plummeting bolivar fuerte, reportedly backed by the nation’s oil reserves.

In Russia, deputy minister of economic development Oleg Fomichev suggested the proposed CryptoRuble, conceived in a climate of heavy anti-crypto sentiments regarding adoption by private companies but nonetheless in state hands, becoming another powerful sanction breaker in the current political climate. Russian president Vladimir Putin stated that the Stone Age has not ended because humanity has run out of stones, but because new technologies have appeared.

“If if central banks were to back cryptocurrencies, the central banks would be better positioned to predict money demand and therefore adjust supply accordingly,” writes Mohamed Damak of S and P Global, adding, “It is still too early to tell in which direction this instruments will move.”

Alternatively, he writes, “If cryptocurrencies were to take off and become an effective currency issued in a decentralized manner, the impact on monetary policy implementation would be deep, since central banks might lose their ability to control the money supply.”

It is a view more closely aligned to Satoshi Nakamoto’s original vision.

 

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