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Israel`s Cash Cap and Implications on the Country’s CBDC Development

Author

Listed:
  • Andreas V. Ledwon

    (Institute for Strategic Finance, FOM University of Applied Sciences for Economics and Management, Germany)

  • Clemens C. Jäger

    (Institute for Strategic Finance, FOM University of Applied Sciences for Economics and Management, Germany)

Abstract

This paper analyzes the latest developments in Israel`s law to reduce the use of cash and its implications on the Country’s retail Central Bank Digital Currency (CBDC) development. Hence, the goal of our paper is twofold: (1) to shed light on the latest limitations of Israel’s law to reduce the use of cash as of 1st August 2022, also known as “Locker Agreement”, and (2) highlight its implications promoting advanced means of payment and a retail CBDC as an alternative to paper-based means of payment such as cash and checks while enabling privacy. In particular, we present to the audience Israel’s latest CBDC blockchain trials aiming to overcome raised privacy concerns. We conclude by challenging the effectiveness of highlighted motivations to potentially issue a Digital Shekel and assess the desired financial inclusion from various angles, before providing an outlook in an area which would be of benefit and interest to academics and practitioners. Finally, we encourage for further empirical research contributions on this field.

Suggested Citation

  • Andreas V. Ledwon & Clemens C. Jäger, 2022. "Israel`s Cash Cap and Implications on the Country’s CBDC Development," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 8(6), pages 37-43, September.
    • Handle: RePEc:mgs:ijmsba:v:8:y:2022:i:6:p:37-43
    DOI: 10.18775/ijmsba.1849-5664-5419.2014.86.1004
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    References listed on IDEAS

    as
    1. Amartya Lahiri, 2020. "The Great Indian Demonetization," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 55-74, Winter.
    2. Kenneth S. Rogoff, 2016. "The Curse of Cash," Economics Books, Princeton University Press, edition 1, number 10798.
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    More about this item

    Keywords

    Bank of Israel; Cash Cap; Digital Shekel; Financial Inclusion; Locker Agreement; Privacy Budget; Shadow Economy; Retail CBDC;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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