The Finance Ministry and Bank of Israel are considering issuing a digital currency. The digital shekel would record every transaction by mobile phone and make it more difficult to evade taxation, according to a finance official who spoke to The Jerusalem Post on condition of anonymity.
“You can imagine that instead of giving you a piece of paper saying the Bank of Israel on it, I can send you a piece of digital code that was issued by a central bank,” the official said.
It is unclear where the digital wallet would be located – either in a Bank of Israel account or on your mobile phone. And if somebody stole your phone, what would happen to your digital wallet?
In order to issue a state cryptocurrency, the Bank of Israel’s plans would need to be approved by the Knesset, the finance official added.
“There’s a lot that people need to think about before going through with this reform,” the official said. “We’re looking at the legal, financial, regulatory and money- laundering sides of this.”
Unlike Bitcoin (Bitcoin), where the set number of Bitcoins is fixed, sovereign governments can print and issue however much state currency they desire. That hypothetically makes Bitcoins more resistant to inflationary pressure – similar to gold – in terms of store value.