Israel, Hong Kong enter partnership to test new CBDC against cyber risks
The Bank of Israel has worked with the Hong Kong Monetary Authority to test the new Central Bank Digital Currency (CBDC). Bloomberg News Reported on June 16th.
The project is scheduled to begin in the third quarter, citing the Bank of Israel, the publication reported. This initiative is based on a two-tiered CBDC issued by the Central Bank. Banks and other financial intermediaries are responsible for the distribution of digital currencies.
The CBDC’s design, reportedly, allows intermediaries to use it without financially exposing their customers. Banks involved in the project should test whether the above features make the CBDC less vulnerable to cyberattacks.
Bloomberg quoted the Bank of Israel as reporting that the CBDC’s design is considered exposure-free and is expected to minimize financial risk to its clients. In addition, central banks predict that digital currencies will be characterized by high liquidity, low cost, intensified competition, and broader access.
Bloomberg reported that the Bank for International Settlements (BIS) Innovation Unit will also participate in this project.
Bank of Israel has not yet decided on a digital shekel
The news comes from the Bank of Israel’s continued stalling as it issues the CBDC.
Last month, the central bank revealed that it had already received official approval to issue digital shekels. The Bank of Israel received 33 responses to public opinion requests on this issue. Of the 33 responses, 17 were from the fintech sector.
In particular, all responses favored the issuance of the CBDC. According to public opinion, digital shekels help strengthen the economy by minimizing cash use and improving financial technology.
However, the central bank has not yet announced whether to pursue that idea. It is said that the general public has different opinions about the privacy of digital shekels.
The bank has been exploring the concept of the CBDC since 2017 and said it has not yet decided whether to introduce or launch a digital shekel. The Bank of Israel has only promised to continue discussions on the CBDC with its stakeholders.
Meanwhile, the People’s Bank of China (PBoC) is approaching the rollout of digital yuan after releasing a trial version of the digital yuan wallet earlier this year. The country has not yet announced the official release date of the CBDC. So far, only Nigeria and the Bahamas have launched the CBDC. CBDC tracker..
