Bank of Israel Selects 14 Teams for Digital Shekel Challenge, Advancing CBDC Development
The Bank of Israel has taken a significant step forward in its central bank digital currency (CBDC) initiative by selecting 14 teams to participate in the “Digital Shekel Challenge.” Announced on May 28, 2024, this experiment, inspired by the BIS Innovation Hub’s “Project Rosalind,” aims to explore potential use cases for a digital shekel system.
The challenge has attracted considerable interest from fintech and finance communities both in Israel and abroad. The selected teams represent a diverse mix of veteran financial companies, fintech firms, technology companies, and private teams. Notable participants include industry giants such as PayPal Israel, Fireblocks, and IDEMIA France, as well as blockchain-focused companies like COTI and Qedit.
The Bank of Israel established an internal committee to evaluate proposals based on several criteria, including innovation, compatibility with the Israeli economy’s needs, alignment with the bank’s motivations for issuing a digital shekel, and effective use of API functionality. The selected use cases cover a wide range of fields, including:
- Connectivity between the digital shekel, other payment systems, and cash
- Advanced functionalities such as subwallets, conditional payments, and split payments
- Implementation of various technologies using the digital shekel as a means of payment
Beginning in August, the challenge’s sandbox will allow selected teams to develop their proposed use cases. The results will be presented at a concluding conference hosted by the Bank of Israel at the end of October.
Bank of Israel Deputy Governor Andrew Abir expressed enthusiasm about the challenge, stating, “The digital shekel’s potential to create innovation in the payments array will depend on the private sector’s ability to leverage the platform that the Bank of Israel will build, which is what makes this Challenge so important.”
This initiative marks a significant advancement in Israel’s CBDC development, which has been under consideration for the past six years. The selection of blockchain-focused companies like COTI, which claims to be the only blockchain selected for this purpose, indicates the bank’s interest in exploring advanced technological solutions for the digital shekel.
The Digital Shekel Challenge aligns with global trends in CBDC development, as many countries worldwide are exploring or actively developing their own digital currencies. This project, along with Israel’s participation in Project Sela (a collaboration with the Hong Kong Monetary Authority and BIS Innovation Hub focusing on retail CBDC systems), demonstrates the country’s commitment to staying at the forefront of digital currency innovation.
