EFRAT FENIGSON
Note the examples from the video: CBDC will be used to receive salaries, allowances, taxation, physical & online purchases etc.
An interesting use case example from the Digital Shekel challenge document, reveals the exact API function in the CBDC code that enables DISABLING or FREEZING wallets.
How convenient to use a “parental control” use case, while in reality there’s no problem to use this for ANY wallet, and ANY time the state/gov/central bank/bank/financial institution decides to or is instructed to do so:
“5.1 Children’s wallet supervised by a parent – the possibility of connecting secondary wallets to a central wallet: Main (“OpenSubWallet”) can support the business need of linked children’s wallets to a main wallet (for example, the parent’s), to allow the parent to monitor the child’s sub-wallet, decide to freeze (“Freeze”) or temporarily disable (“Disable”) the activity of the wallet”.
Pay attention to the architecture design manifested in this “digital shekel challenge”.
It reveals how central banks will implement CBDCs, in a 2-tier system.
Central banks will act as the CBDC issuer – lending CBDC to financial institutions in the same way Fiat is created and lent today, and PSPs (Payment Service Providers) will be the ones to implement, manage, and transact with end-users, and then settle with the central bank.
This preferred architecture was announced by the Israeli central bank in March 2024 in this document:
“The conclusion in the paper is that the optimal model is an indirect distribution model, in which the Bank of Israel will distribute digital shekels to the institutions that manage current accounts, and these will support the distribution to the end users; this model has several advantages; in particular, it supports better performance of the loading operations and redemption, and it is a step in the direction of a multi-purpose digital currency, because the use of the same system by both financial institutions and end users can pave the way for a system that will support both wholesale and retail uses.”
Israel will keep developing its CBDC abilities in a race to be “pioneers” in one more area. I’ll keep watching and keep you updated.