Bank of Israel announced the creation of a sandbox environment to test the digital shekel: refining the design and facilitating the development of applications are the goals.
On April 16, the Bank of Israel (BoI) announced the implementation of a sandbox environment to test the use of the national CBDC. The goal is to refine the design of the digital shekel and ensure its ability to facilitate advanced applications.
Andrew Abir, the central bank’s deputy governor, stated:
“We are now building the system and intend to officially announce the project in the coming weeks.”
The operation of the sandbox environment
In sandbox contexts, experimentation with new digital technologies, including innovations in the financial sector, is conducted in a controlled environment before their full-scale deployment. The platform, based on APIs, will encourage the participation of financial institutions, fintech companies, and other stakeholders, and will allow for the development and testing of applications for the digital shekel.
Difference between CBDC and digital assets
The central bank’s deputy governor wanted to emphasize the difference between the digital shekel and cryptocurrencies, stating:
“The digital shekel will not be developed by some anonymous Satoshi Nakamoto. Everyone will know who is behind the digital shekel and who is responsible for it: it will be the central bank, the same Bank of Israel that stands behind the cash we all know and trust.”
He then continued:
“A digital shekel will always be worth one cash shekel which is always worth one shekel in a bank account.”
The digital shekel will be implemented through a two-tier operational model, allowing various entities to participate as payment service providers or providers of additional services within the platform. The central bank’s intention is to make the platform accessible to a wide range of participants, from traditional banks to payment companies and fintech firms, and even consumers.
