The Central Bank of Israel, together with the Hong Kong Monetary Authority, against the backdrop of global tightening of cryptocurrency regulation, will test the security of the Central Bank’s digital currency in the face of incomplete information about the owner.
The two regulators are set to launch joint testing of cybersecurity methods using the Israeli central bank’s two-tier digital currency in the third quarter. The state cryptocurrency will be tested for the ability of banks to protect customers while minimizing the requirements for information provided by CBDC holders.
During testing, the security system of the state digital currency of the Central Bank is evaluated in terms of the minimum, most necessary information about the client. The Bank of Israel believes that the CBDC, which requires a minimum set of holder information, carries “less financial risk for the client, greater liquidity, lower costs, increased competition and greater access.” The innovative division of the Bank for International Settlements (BIS) should take part in the joint testing of the state digital currency of Israel.
In June, the Deputy Governor of the Reserve Bank of India, T Rabi Sankar, said that central bank digital currencies could completely replace cryptocurrencies, including bitcoin.
In May, the management of Circle, the company that issues the USDC stablecoin, said that the launch of central bank digital currencies would do more harm than good. The company’s specialists explained that instead of increasing financial inclusion and reducing costs, the introduction of a digital dollar could lead to the opposite result. Due to rising inflation, citizens’ trust in government and financial institutions is declining, so people who do not have access to banking services will be less likely to interact with banks and use Central Bank products, Circle experts say.
