The Bank of Israel shared details on the technical architecture of its central bank digital currency (CBDC), which includes 24/7 system availability, instant settlements, and offline payment support.
The Bank of Israel (BoI) published technical details of the Digital Shekel (DS) project, aimed at boosting competition in the payments sector and ensuring a backup financial transaction channel in emergencies while maintaining a high level of user privacy.
A key feature of the payment system is offline payment support, ensuring functionality during network disruptions or power outages. To combat fraud, a centralized transaction monitoring system will operate in real time, assessing risks for each transaction.
The proposed concept outlines a two-tier model, where the Bank of Israel acts as the issuer and system operator, while commercial entities (payment service providers) will connect users and offer payment services. The document highlights that the DS will be accessible to the entire population, including foreigners and minors, with instant transactions available 24/7/365, settling within seconds.
Users are promised a higher level of privacy. The Bank of Israel won’t store personal data of wallet holders, and transaction anonymity up to set limits is designed to make the DS comparable to cash in terms of privacy.
For private users, basic transactions will be free, while businesses will enjoy lower fees than current payment processing rates. Developers also emphasize that the Digital Shekel will create new opportunities for financial and tech companies, including smart contracts and seamless integration with other payment systems.
The Bank of Israel plans to release final recommendations by 2026 on whether to fully launch the Digital Shekel. The document notes that development began in 2017, with the current phase of work on the CBDC starting in 2020. In 2022, the BoI experts found no major risks associated with the Digital Shekel, and in 2023, the Bank of Israel’s steering committee decided that the CBDC’s issuance will depend on global trends in digital currency adoption.
