The Bank of Israel published a report on the logical architecture for the digital shekel to support the provision of a full solution to end users in the various transactions and activities involving the digital shekel, based on a number of assumptions and decisions that have been made in the project so far, and which have a significant effect on the characteristics of the selected architectural alternatives.
- The architecture will implement the two-tier model (retail and wholesale);
- The system will support immediate and final payments, 24/7;
- Payment service providers will not create financial exposure as part of the provision of services in the digital shekel framework;
- In order to ensure a competitive environment, an end user will be able to operate through multiple payment service providers at any given time;
- The system will support the initiation and enforcement of restrictions, such as limits on the balance that a user can hold in digital shekels;
- The system will support the option for the central bank to have the digital shekel bear interest;
- Interoperability with a solution that allows offline use of the digital shekel will be enabled;
- The architecture will support all design decisions made so far in the project. In particular, in the area of privacy, the architecture will allow the central bank, as the system administrator, to define the types of information required for the operation, control, and monitoring of the system. However, the central bank will not have access to personally identifiable information about end users’ balances and transactions. Additionally, the architecture will enable different levels of privacy in the central database according to the type of user (individual, business, etc.), type of transaction, etc.
In a separate news item, the first ever Israeli shekel-backed stablecoin has been approved for pilot launch under the Israeli Capital Market, Insurance and Savings Authority, according to Calcalist and various media outlets. BILS, a stablecoin fully backed by and pegged to the New Israeli Shekel (NIS or ILS), is being launched by Israeli crypto financial services company Bits of Gold.
The BILS pilot is based on the Solana blockchain. Fireblocks, a key player in the Tel Aviv Stock Exchange’s Project Eden, a POC of the first digital government bond issued by the Israeli Ministry of Finance, will contribute with its institutional-grade infrastructure to manage the issuance of the currency. Privacy features will be incorporated through the utilization of Zero Knowledge Proofs (ZKP) technology with global ZKP leader QEDIT, which will also help establish the technology infrastructure for the entire project.