The Bank of Israel is calling on various entities and organizations to join an initial experiment and develop innovative and diverse use cases within the framework of the action plan for the possible issuance of a digital shekel.
The Bank of Israel has launched its Digital Shekel Challenge, following the recent announcement of a central bank digital currency (CBDC) sandbox. This initiative invites participants from both Israel and abroad to develop innovative use cases for the digital shekel. Drawing inspiration from the BIS and Bank of England’s Project Rosalind, the Challenge aims to facilitate connections to the CBDC system through APIs. The application deadline is July 11.
The central bank has proposed a range of potential use cases, including split payments, micropayments, various conditional payments, and sub-wallets. Participants will be evaluated based on several criteria, with the primary factors being the innovative nature of the use case and its alignment with Israel’s economic needs. The third criterion is how well the use case meets the objectives outlined for the digital shekel. These objectives include:
- Enhancing competition
- Fostering innovation
- Increasing redundancy and resilience in the payments system
- Facilitating cross-border payments
- Ensuring privacy in payments
- Reducing cash usage by making the Digital Shekel more accessible to cash-dependent groups
Use cases examples
The system can support payments between a variety of end user types (individuals, businesses, government and the public sector, nonprofits, and so forth) on a variety of access technologies (smartphone, Internet application, featurephone, POS proximity (NFC), smart cards, QR codes, etc.) in a variety of payment scenarios that already exist (large and small amounts, wage payments, rental payments, in-store or online shopping, bill payments, benefit payments, travel on public transit, transfer between individuals, donations, and so forth). The APIs also support RequestToPay transactions and applications derived from this capability. In addition, the APIs can enable advanced and innovative use cases such as split payments, micropayments, conditional payments, subwallet management, advanced information-based services, and etc.
While the CBDC is structured as a two-tiered system, unlike other countries where it is more integrated with banks, Israel emphasises that a CBDC wallet provided by a non-bank payment provider can still be funded from a bank account.
To learn more about this challenge and apply please visit The Bank of Israel’s website