Israel Considers Cryptocurrency For Faster Payments

Israel could be turning to cryptocurrencies to accelerate its payments system.

Reports in Reuters this week said the Bank of Israel is exploring the use of a digital currency to reduce the economy’s reliance on cash and introduce faster payment capabilities into the country. The publication cited an unnamed source at the bank, who added that no plans have been finalized for such a project. But, if the central bank approves, the government could include the plan in its budget as early as 2019.

“Central banks around the world are examining [the use of digital currencies] so we should as well,” the source said.

The nation could centralize the digital currency and ensure it is covered under anti-money laundering (AML) and other regulations. The Bank of Israel declined to comment on the matter.

While Israel is seeking to lessen reliance on cash, the government is also exploring a faster payments framework similar to those rolling out in other markets like the EU and U.S. In November, the Bank of Israel released a consultation seeking public proposals for a faster payments infrastructure that supports real-time payments.

While the nation’s central bank could see the benefit of a cryptocurrency, the Tel Aviv Stock Exchange (ISA) may ban companies dealing in bitcoin and other digital currencies. The ISA’s chairman, Shmuel Hauser, said he will introduce this idea to the ISA board next week. If it finds support, a public hearing would follow, and the exchange’s bylaws would need to be changed.

“If we have a company that their main business is digital currencies, we would not allow it,” Hauser said. “If already listed, its trading will be suspended. We feel that the prices of bitcoin behave like bubbles, and we don’t want investors to be subject to that volatility and uncertainty. There is an importance to signal to the market where things are … investors should know where we stand.”