The Israeli government is considering a digital version of its national currency, the shekel.
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.
The Post reported that for several months now, regulators have been examining the possibility of a state-sponsored currency, and the government could review a tentative legal framework in January. The digital shekel would be identical in value to the physical shekel currently in use. The anonymous finance official told the Post:
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.
Lou Kerner, a partner at CryptoOracle, a venture-capital firm and Bitcoin investor, told the Post:
Governments have two options. They can either roll out the red tape or roll out the red carpet – and they roll out the red tape at their own peril. So, it turns out, these [Bitcoin-related] companies will go somewhere else. And the Tel Aviv Stock Exchange loses out. It’s like saying, ‘We won’t allow Internet companies to trade.’
In order to issue a state cryptocurrency, the Bank of Israel’s plans would need to be approved by the Knesset, the anonymous finance official told the Post, adding:
There’s a lot that people need to think about before going through with this reform. We’re looking at the legal, financial, regulatory and money- laundering sides of this.
There are no state-sponsored cryptocurrencies yet in the world, the Post reported. But the exploration of the idea in Israel is reflective of the awareness of cryptocurrencies that is sweeping the globe. The fact that governments are considering issuing their own digital currencies means they are beginning to understand that this is the future of how transactions will occur.
(Note: This post is one in an ongoing BitcoinCoaches.com series detailing the positions of world governments toward Bitcoin and cryptocurrency. Visit https://www.bitcoincoaches.com/category/regulatory/ for the full series.)