A number of news outlets in Israel have reported that the country’s Ministry of Finance, in conjunction with the central Bank of Israel, are looking at creating a state-sponsored cryptocurrency.
The reports cited anonymous government sources.
According to the reports, the move is being looked at as part of an initiative to reduce dependency on cash transactions, as well as to keep all-digital transactions within the banking system. Existing cryptocurrencies such as Bitcoin, Ethereum, Ripple and Dash exist outside the global banking system.
Israel’s initiative seems to mirror that being considered seriously in Sweden, which (like Israel) has relatively high tax rates giving those looking to avoid taxes heavy incentive to work outside the traditional finance and banking system. China has also launched plans to look at a state-sponsored digital currency, not surprising given that a significant percentage of crypto trades are today being carried out by China-based traders.
The plan being considered in Israel would see a line of code that will be issued by the Bank of Israel, which would constitute an additional means of payment as an alternative to cash. The Israel token would be stored either on a mobile device and/or a digital wallet managed at the Bank of Israel or at one of the country’s commercial banks.
In terms of timing, the reports varied from this being a long-term (i.e. later in 2018) plan still in the feasibility study phase, to actual legislation already being drafted to give the Bank of Israel the latitude it needs to create a test token.
Israel has a very high-tech focused economy, but its finance and banking system is known as being fairly conservative. So, it remains to be seen if the country’s governmental and central banking powers will actually charge ahead or, more likely, see how similar plans pan out and are implemented in places such as Sweden and China before proceeding.