Digital shekel

The digital shekel is a proposed digital form of Israeli central bank money that the Bank of Israel is studying as an additional means of payment alongside banknotes and coins. If issued, it would be a liability of the central bank, available for digital use by the public and other eligible users. The Bank has published a preliminary system design but has not decided to issue it.^[1][2]

Status and project timeline

The digital shekel is a project to examine a possible central bank digital currency, commonly abbreviated CBDC. The Bank of Israel has explored the subject since 2017. A high-level design was completed at the end of 2024 and published for public and professional feedback on March 3, 2025. The consultation period ended May 15, 2025. The Bank describes that design as preliminary: it does not by itself establish that the system will be built or issued.^[2][3]

As of the Bank’s published FAQ, no decision has been made on issuance. The project’s 2025 progress report, published in 2026, says that a two-year work plan was established to enable the Bank to reach a decision by the end of 2026 regarding potential issuance in some form. This is a decision target, not an announced launch date or a commitment to issue the currency.^[1][4]

The project’s purpose is therefore preparatory and evaluative. It examines possible use cases, technical feasibility, economic effects, system governance and regulation so that the Bank can assess whether issuance is justified and, if so, what form it should take. Any implementation would require further design and work with public- and private-sector bodies.^[2][4]

What kind of money it would be

A CBDC is a digital form of currency issued by a central bank. Under the proposed model, digital shekels would represent a direct claim on the Bank of Israel, rather than a commercial bank’s promise to repay a bank deposit. The unit would be denominated in shekels and intended to function as public money in digital form. The Bank describes it as an additional means of payment, not as a replacement for cash.^[1][3]

That distinction separates a potential digital shekel from both commercial bank deposits and privately issued digital assets. Bank deposits are liabilities of the institutions holding customers’ accounts; digital shekels, if issued, would be central bank liabilities. The Bank also distinguishes its proposed currency from cryptocurrencies: its value would be supported by the central bank’s monetary framework, rather than depending on a privately operated cryptoasset protocol or issuer.^[1]

The Bank’s preliminary design is described as multipurpose. It considers a system that could serve retail users, such as households and businesses, as well as financial entities using central bank money for wholesale purposes. The retail and wholesale functions are design possibilities under examination, not currently available services.^[4][5]

Proposed system structure

The Bank of Israel has examined a two-tier model for retail access. In such a model, the central bank would issue and manage the currency and core system, while private-sector intermediaries would provide services through which end users access it. This separates the public-money function from customer-facing activities such as onboarding and wallet or payment services.^[6]

The preliminary design identifies several types of system participants, including the Bank of Israel, payment service providers, financial institutions and additional service providers. The envisaged roles include operating the central system, connecting users, enabling conversion between digital shekels and other forms of money, and providing optional services. The design also considers central services such as alias management and fraud monitoring. Specific responsibilities, eligibility requirements and governance arrangements remain matters for detailed design and regulatory work.^[2][4]

A two-tier model does not mean that users would hold a digital claim on their intermediary. The architecture examined by the Bank is intended to allow end users to access central bank money through intermediaries without those intermediaries acquiring financial exposure to the CBDC itself. The design and its institutional arrangements would need to clarify how system participants handle customer access, payments, security and operational continuity.^[6]

Proposed payment features

The Bank’s preliminary design presents the digital shekel as a possible universal payment method: eligible users could pay and receive payments across a range of user types. The proposed audience includes individuals, businesses, public institutions and financial entities; the Bank’s 2025 announcement also described potential availability to children and foreign users, including tourists. Such access would depend on final system rules and implementation.^[2][3]

The Bank says that transfers in the proposed system are intended to be immediate and final, with payments between wallets expected to occur within seconds. The design also contemplates offline payment functionality, which could allow payments when a device lacks a network connection. Offline capability raises practical requirements, including secure transaction authorization, limits and procedures to manage the possibility of double spending or loss. These features have been identified for further technological assessment and are not capabilities of an issued digital shekel today.^[1][3][5]

The Bank has also described possible interoperability with existing payment methods and systems, and advanced functions that could support new payment use cases. The preliminary design is technologically agnostic; it does not commit the project to a particular distributed ledger or other underlying technology. In 2025, the Bank sought technical input on areas including the system’s backend, secure communications, offline operation, payment authorization and cryptographic key management, alias management, and fraud monitoring.^[5]

Potential benefits and costs

The Bank’s stated reasons for studying issuance include the possibility of increasing competition in payments, supporting innovation, and strengthening the resilience of payment infrastructure. A central-bank-backed digital payment instrument could offer another way to make and receive payments, potentially reducing reliance on particular payment providers or infrastructures. These are objectives and expected effects described by the Bank, not established outcomes.^[1][3]

The preliminary design envisages basic use by private individuals without fees and lower costs for businesses than some existing digital payment methods. The Bank also describes potential advantages in speed, availability and payment functionality. These terms are projections in the design rather than a published schedule of fees for an operating service. Actual pricing, adoption, access and effects on the payment market would depend on final rules and implementation.^[1][3]

The Bank’s 2025 progress report includes a cost-benefit analysis and says the project team concluded that the estimated economic benefits exceed the costs under the analysis. The report also examines the regulatory structure, multipurpose use, technological feasibility, business preferences and public feedback. That conclusion is an analytical finding within the project’s evaluation; it does not itself constitute a decision to issue.^[4]

Privacy, security and consumer protection

Privacy is one of the design issues. The Bank presents the possibility of greater privacy than some existing digital payment methods as a potential feature, but this does not mean that the proposed system would necessarily provide the same anonymity as cash. Digital payments require rules and technical controls addressing data access, fraud prevention, legal obligations and system security. The design process considers privacy alongside these requirements, and the final balance would depend on the system’s architecture and governing rules.^[1][2]

The Bank has also identified cybersecurity and fraud as concerns. Its FAQ says the system would be designed with information security and protection against cyberattacks in mind, while acknowledging that consumer fraud remains a risk in digital payments. It anticipates consumer protections broadly comparable to those in existing digital payment methods. Those statements describe design objectives and expectations, not a record of protections already operating for digital shekel holders.^[1]

A possible digital shekel would also be distinct from Israeli depositor protection. Depositor-protection arrangements concern eligible claims against deposit-taking institutions; a digital shekel, if issued, would instead be a direct liability of the central bank. Its legal treatment, user safeguards and relationship with existing financial rules would require legislation or regulation as appropriate. The project’s work on a regulatory structure is part of evaluating those questions.^[1][4]

Banking-system implications

One subject of the Bank’s research is how a digital central bank payment instrument might affect commercial banks. If households or businesses shifted substantial funds from bank deposits into digital shekels, the composition of bank funding could change. The scale and consequences would depend on user demand, system design and any safeguards adopted. Earlier Bank of Israel project publications examined potential effects on the Israeli banking system; the 2025 progress work continued to consider costs, benefits and regulatory arrangements.^[3][4]

The proposed intermediary model is relevant to this issue because it keeps private-sector institutions involved in user-facing access and related services. However, that involvement does not make the digital shekel a bank deposit, and it does not resolve by itself how the system might affect banks’ funding or payment businesses. The Bank’s design process treats those matters as subjects for assessment rather than settled outcomes.^[4][6]

Research, consultation and open questions

The project has involved public consultations and technical experiments as well as design work. After publication of the preliminary design in March 2025, the Bank invited public and professional feedback. It also ran a separate series of technological consultations seeking input from experts, academics and potential vendors on six system components. The stated purpose was to deepen understanding of technological feasibility, not to announce that a CBDC would be issued.^[3][5]

Earlier project work included experiments, including a distributed-platform proof of concept and Project Sela, which explored a two-tier architecture in cooperation with the BIS Innovation Hub and the Hong Kong Monetary Authority. Such experiments can test design assumptions and technologies in bounded settings; they are not equivalent to operating a public payment currency.^[6][7]

Important open questions include the final scope of retail and wholesale use, participant eligibility, wallet and payment-service responsibilities, privacy safeguards, offline limits, technical architecture, fees, consumer redress and the applicable regulatory framework. The Bank’s process is intended to inform a future decision on whether to issue and, if it decides to proceed, what additional design and implementation steps would be required. Until then, the digital shekel remains a proposal under study, not a currency people can hold or spend.^[1][2][4]