Does the public really understand what the digital shekel is, and is willing to adopt it?
Efrat Fenigson
On April 1st, at the KPMG offices in Tel Aviv, several dozen people gathered for a meeting of the “CBDC IL Forum” to hear representatives from academia, the Bank of Israel, and KPMG present findings from a study conducted by the Bank of Israel through “Roschink” research institute. The study included around 1,000 participants, and the results were published on the Bank of Israel’s website. In this article, I will review key points from the meeting, comment on the research published by the Bank of Israel, and share what I had said to attendees at the end of the forum meeting.
Analysis of the study document reveals several methodological issues:
- Sampling method: An online panel was used, meaning participants were already enrolled in digital survey platforms—potentially biasing the sample toward tech-savvy individuals and skewing attitudes about a digital currency.
- Sample representation: The random sampling underrepresented certain groups, especially Arab citizens. Reweighting was used to correct this by doubling responses of some participants, potentially compromising authenticity.
- Risks such as loss of privacy, government overreach, and impact on cash economies may be underrepresented due to a bias toward digitally-inclined respondents.
- Participant dropout: 115 participants dropped out between the first and second questionnaires, which may indicate a selection bias—those more interested in the topic stayed on.
Despite efforts to ensure a representative sample, these methodological limitations may affect the study’s validity.
The study does mention:
- Limited privacy claims: It is stated that “the central bank will not have access to identified information about balances and transactions in users’ wallets,” but also that privacy levels will be defined according to user type—which implies that privacy is not absolute.
- Enforcement capabilities and restrictions: “The system will support the implementation and enforcement of restrictions” on wallet balances, which could indicate the potential for usage limitations. The digital shekel is being designed with technical capabilities to impose limits on wallet balances—meaning it will be possible to define how much money a person is allowed to hold in their digital wallet and monitor that in real time. Although the document does not specify who would be authorized to enforce these limitations, the mere existence of enforcement capabilities indicates a control mechanism that could theoretically allow freezes, blocks, or other restrictions on usage—raising questions about financial freedom, privacy, and institutional power.
- Government control: The Bank of Israel will be “the sole authority empowered to issue and redeem the digital shekel,” meaning there will be no decentralized alternatives like cryptocurrencies such as Bitcoin.
The Trust Factor
70% of Israel’s study participants expressed trust in the Bank of Israel. At the meeting, Ben Benakot of KPMG commented on the trust issue: “If we don’t trust the government, this becomes a problematic issue, because theoretically, CBDCs give the state more data.” Benakot noted that although the Bank of Israel is designing the system so that it won’t have direct access to user information—only authorized payment providers will—there’s no guarantee that a future government won’t change the system and gain direct access to accounts and personal data.
He also mentioned that today, for example, the Israeli tax authority already has the ability to monitor financial data on citizens (albeit not immediately or directly due to oversight). In theory, the digital shekel is not very different.
To conclude: I believe it is vital to raise public awareness around the digital shekel, because clearly “the future is already here.” For that reason, it is essential to openly present both the risks and benefits of a digital shekel system so that an informed public can participate meaningfully in the conversation and make relevant choices about their lives.