Saad Ullah
The reportcomes after the team was setup by the Governor of Bank of Israel to investigate the feasibility of a national cryptocurrency being formed using blockchain and other decentralized ledger technologies.
Little Surprise
Although Israel has a very active blockchain technology industry, the report was expected as such. The Jewish state is not the only country that has looked into the possibility of a centrally controlled digital currency. CBDCs are largely rejected by many countries and financial watchdogs due to purely digital assets being incompatible with paper based cash system.
The study group, however, does recommend further studying and keeping an eye on the development and use of a national cryptocurrency, “The team does not recommend that the Bank of Israel issue digital currency in the near future. It is necessary to continue examining the field and to follow developments around the world before there are proper grounds for a decision to recommend issuing digital currency.”
The suggestion to not use cryptocurrency was also reflected by European Central Bank’s President, Mario Draghi while addressing the European Parliament. Similarly, Governor Masayoshi Amamiya of Japan’s Central Bank has rejected (once again), the opposition of a central cryptocurrency.
CBDC Countries
A few countries, especially China and Venezuela, in stark contrast, are actually very actively promoting the use of a government issued cryptocurrency. Along with them, Canadian and Sweden central banks have also shown interest in the possibility of CBDCs.
The issue of rejection mostly lies in the fact that changing of hard cash is incompatible with online transactions of cryptocurrencies. Unless and until a society gets rid of all cash based transactions (that means even a child spending a few cents or pennies for a candy), the implementation of cryptocurrencies at a national level is not possible.
Only Venezuela, the South American country, has officially launched a CBDC. The hyperinflation and sanction hit country’s residents are already using cryptocurrencies such as Dash to do day to day transactions.
Saad Ullah
