Palestine has decided to study more deeply the technology behind a central bank digital currency (CBDC) as it wants to become more monetary independent from Israel, Bloomberg reports. According to Palestinian Monetary Authority Governor, Feras Milhem, the central bank is already preparing to conduct two studies on cryptocurrencies. The regulator hopes that Palestine will eventually use digital currency "for payment systems."
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Raja Khalidi, Head of the Palestine Economic Policy Research Institute, believes that the CBDC could send a "political signal to show apparent appearance of monetary autonomy from Israel." However, Barry Topf, ex-Senior Adviser to the Bank of Israel Governor, doubts that a Palestinian CBDC would become a real means of exchange.
"It is not going to replace the shekel or the dinar or the dollar. It is certainly not going to be a store of value or a unit of accounting," he said.
Palestine's focus on CBDC appears after the Bank for International Settlements (BIS) noted an urgent need for CBDCs to modernize finance. The international financial institution also believes that CBDCs will protect countries from digital currencies' monopoly of big tech companies.
Benoît Cœuré, the Head of the BIS Innovation Hub, says that the digitization train has left the station as 56 central banks are already exploring the creation of digital currencies. Cœuré also claims that without CBDC, digital money will increasingly be dominated by large tech companies as they leverage huge social media user bases.
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