Now, Israel's central bank mulls digital currency

The Bank of Israel is examining issuing digital currency as a means of creating a faster payments system as well as reducing the amount of cash in the economy, a central bank source said on Sunday, though he stressed no decision had yet been made.

The emergence of bitcoin and other so-called cryptocurrencies has led some economists to predict the technology could be used one day across entire economies, with digital currencies created by central banks.

But the Israeli source said any digital currency introduced by the country’s central bank would be centralised, safe and abide by money laundering rules — in contrast to bitcoin and its peers, which are decentralized and whose value has often oscillated wildly.

“Central banks around the world are examining (the use of digital currencies) so we should as well,” the source said. The Bank of Israel declined to comment on the issue.

Cryptocurrencies allow parties to transact payments directly without a central intermediary, by means of blockchain technology that uses a shared ledger that verifies, records and settles transactions.