Central Bank Of Israel Tries CBDC Smart Contract

Israel develops central bank digital currency. (Unsplash)

JAKARTA – The Bank of Israel plans to launch a central bank digital currency (CBDC). The central bank is currently testing user privacy and the use of smart contracts in payments.

This is Israel's first technological experiment in CBDC development. The first phase of the trial modeled car sales in a two-stage system of providing payment services.

The bank said that the service provider completed Know Your Customer (KYC)/Anti-Money Laundering (AML) checks and provided the required blockchain addresses.

Then an NFT will be issued to show ownership of the car in the absence of a licensing authority to make the transfer. The smart contract will exchange the seller's NFT and the buyer's money, with the seller having the right to cancel the transaction if conditions in it, such as the price of the car, are not met.

According to the BeinCrypto report, the Bank of Israel emphasized that the trial does not guarantee the issuance of digital shekels. Instead, trials are used to help its professionals understand blockchain technology and the Ethereum ecosystem.

In addition, the Bank of Israel began a central bank currency issuance project with the Hong Kong Monetary Authority amid increasing public support for the CBDC.

Israel's central bank plans to launch its 2022 project in the second quarter. On the other hand, commercial banks will act as intermediaries between customers and the central bank. This is intended to strengthen the currency from cybercrime.