The Bank of Israel plans to launch a sandbox environment for conducting trials on the use cases of Central Bank Digital Currency (CBDC), aiming to refine the design of the digital shekel for advanced applications.
Andrew Abir, the central bank’s deputy governor, announced the initiative on Tuesday, stating that the project will be officially announced in the coming weeks.
A sandbox provides a controlled setting for evaluating new digital technologies, including financial innovations, before their widespread adoption. It allows firms to experiment with these technologies under relaxed regulatory conditions, fostering innovation.
The API-driven sandbox will enable participation from financial institutions, fintech firms, and other stakeholders to collaboratively develop and test innovative applications for the digital shekel.
Abir emphasized that the digital shekel will be a liability of the Bank of Israel to the public, similar to physical cash, and distinct from cryptocurrencies. He assured that its value would remain stable, unlike volatile cryptocurrencies.
The digital shekel is envisioned to enable transactions currently not feasible with cash, such as those in e-commerce. It will operate on a two-tiered model, allowing various entities, including traditional banks, payment companies, fintech firms, and consumer clubs, to participate in the platform.