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Highlights
- Israel is looking to revive its Digital Shekel or CBDC project
- The firm has tapped Layer-2 protocol COTI to bootstrap the CBDC project
- COTI is now joining the likes of Paypal and Fireblocks in the venture
COTI Foundation has secured a seat with the likes of Paypal and Fireblocks to work on Israel’s Central Bank Digital Currency (CBDC) project. The Israeli CBDC is dubbed Digital Shekel.
Bank of Israel to Explore Advanced COTI Features
The Layer-2 scaling network COTI announced the strategic collaboration on X, stating that it is a significant milestone in its evolution.
Noteworthy, COTI identifies itself as a leader in the CBDC niche due to the advanced features that it offers. These features offered by COTI’s privacy-focused L2 blockchain can hold and securely transact CBDCs. It was the only blockchain selected by the Bank of Israel to take part in the CBDC initiative.
Currently, several nations are are at different points in their CBDC journey. The few without an active CBDC project are more are likely to join with time. With the expansion, there is likely to be a growing need for credible and scalable blockchain infrastructure. The Layer 2 has revealed that it would strategically position itself to meet this need as a leader in the CBDC marketplace.
As the only blockchain network selected to take part, COTI’s privacy-focused L2 blockchain offers advanced features to hold and securely transact with CBDCs.
2/3
— COTI Foundation (@COTInetwork) July 23, 2024
In this case, the L2’s focus will be on the implementation and use of advanced functionalities and ways to build an ecosystem around the Bank of Israel’s CBDC. Moreso, COTI will bring its expertise to bear on design considerations. In addition, the protocol’s use of garbled circuits will introduce unprecedented levels of privacy and confidentiality to its users.
Bank of Israel’s Foray in the CBDC Ecosystem
The Bank of Israel has been exploring the CBDC landscape for the past six years. The decision to take COTI on this journey suggest that the institution is making progress. In April 2023, the Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel outlined the plan to issue a digital shekel “SHAKED.”
At the time, the bank cited CBDC issuances by other countries such as the U.S. and the European Union. It also mentioned declining cash transactions in Israel as reasons for a potential Digital Shekel issuance. It also talked about stablecoin adoption, competition in the domestic payment system, and technological developments in payments. Still, it did not finalize plans on the CBDC.
The Bank of Israel later joined Hong Kong Monetary Authority (HKMA) and the Bank for International Settlements Innovation Hub (BISIH) Hong Kong Centre on a retail CBDC project. The trio worked on Project Sela, a retail CBDC ecosystem that is efficient, accessible, and secure with priority on privacy and cybersecurity.
The bank’s return to focus on its CBDC could be an aftermath of Project Sela.
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