(Kitco News) – It seems that even wars and regional conflicts cannot stop the progress towards a world with central bank digital currencies (CBDCs), as the Bank of Israel has announced that they will support a new Israeli shekel that will have to bear interest.
The Israeli central bank released a report on its plans for the digital shekel on Monday, which outlined that the CBDC will be implemented in a two-tier model, with instant, 24/7 payments, multiple payment support, offline usage, limits on balances , and an option for the CBDC to become interest bearing.
Commercial banks in Israel currently offer 4.86% interest on customers’ fiat shekel deposits and savings, and under the proposed plan, banks will be able to hold the shekel CBDC as part of their short-term liquidity buffer, which will be non-interest-bearing. .
This is consistent with the fiat balances that banks hold as part of their reserve requirement against the public’s current accounts and short-term deposits, which do not bear interest and include the commercial banks’ demand deposits with the Bank of Israel and the cash held. in their vaults.
“Digital shekels represent a direct commitment from the central bank and are therefore likely to be included in the liquidity buffer,” the report said. “As a result, the liquidity/financial impact of requiring commercial banks to hold digital shekels to support the indirect model is not expected to incur additional costs compared to the other two models.”
The Bank of Israel also addressed concerns related to privacy, saying that most user information and transaction history would be hidden from the central bank.
“In the area of privacy, the architecture will allow the central bank, as the system administrator, to define the type of information required for the operation, control and monitoring of the system,” the report said. “However, the central bank will not have access to personally identifiable information about end users’ balances and transactions.”
Israel has been exploring issuing a digital shekel since 2021, but has yet to make any concrete plans to release a CBDC to the general public.
“Given the interdependence between the various components of the digital shekel system, the decisions are not final,” the Bank of Israel said.
Russia legalizes digital ruble for foreign trade
Russia sees the release of a digital ruble as a solution to sanctions placed on the country after it invaded Ukraine, and as such Russian President Vladimir Putin signed a law on Monday establishing a regulatory framework for “the conducting foreign trade transactions using digital assets as a means of payment,” including the digital ruble.
While many countries have been slow to pass CBDC legislation, Moscow fast-tracked its bill in late February in an apparent effort to help domestic companies use digital tokens and CBDCs to facilitate cross-border transactions outside of the SWIFT system.
The State Duma’s Committee on the Financial Markets approved important amendments to the legislation on 21 February. After the bill passed the second and third readings in the Duma, the bill was hurriedly moved to the upper house, the Federation Council, on 6 March.
According to the Russian media office RBC, the law will enter into force “from the date of official publication, with the exception of a number of provisions that will enter into force later.”
Russian law currently recognizes a large number of digital assets as digital financial assets (DFAs), including digitized commodities and securities, digital rights and digitized monetary claims. Based on the text of the bill signed by Putin, the central bank of Russia now has the authority to regulate all transactions made with these assets.
DFA issuers must now provide information to the Bank of Russia about the recipients of these assets, and firms using DFAs and CBDCs in payments will be required to record all transactions on a newly created information system.
According to data provided by the Atlantic Council, 134 countries and currency unions, representing 98% of global GDP, are currently exploring the creation of a CBDC, with 19 of the Group of 20 (G20) countries in the advanced stages of CBDC development. There are 36 ongoing CBDC pilots, including the digital euro.
Since Russia’s invasion of Ukraine and the resulting response to G7 sanctions, wholesale CBDC developments have doubled.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. nor Kitco Metals Inc. however, neither the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept liability for losses and/or damages arising from the use of this publication.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
UnCirculars – Cutting through the noise, delivering unbiased crypto news
