Ahead of a conference on payment trends, a survey was published by the Bank of Israel, conducted among 600 respondents, which reflects the public's payment preferences. Most Israelis, it seems, prefer to carry as little cash in their wallets as possible.
When asked how much cash they carry around in their wallet, a majority of respondents (55%) answered that they carry less than NIS 200. Only 8% of people walk around with amounts ranging from NIS 500-1,000 in their wallets, 65% said that they prefer to pay with a credit card, and only 21% pay in cash.
When asked about means of transferring money, 43% of respondents do so through payment apps (mostly Bit) and only 22% perform transfers in cash. Some 51% are unsure whether they would use a digital shekel issued by the Bank of Israel, while 34% of the public think they would.
Governor of the Bank of Israel
Prof. Amir Yaron, the Governor of the Bank of Israel, spoke of the recent collapse of Bitcoin and other cryptocurrencies, reflecting on the Bank's stance on such currencies.
"The events of recent days [the collapse of Bitcoin and other digital currencies] show that we’re still very far from fully adopting the digital system as a normative product in the economy. And we’re quite far from the day when money will disappear from our lives,” Yaron said during the conference.
"Bitcoin is a speculative asset: Its price can soar, fall or remain constant, but contrary to the optimistic or even utopian predictions that came with the issuance of the first cryptocurrency more than a decade ago, it doesn’t replace any of the basic functions of money,” Yaron explained.
"This currency isn’t a means of payment or a unit of measurement, and in light of its high price volatility, it has no sustainable value. As a central bank, we must be entrusted with the supervision and regulation of stable currencies to maintain economic stability," he continued.
"This currency isn’t a means of payment or a unit of measurement, and in light of its high price volatility, it has no sustainable value."
Prof. Amir Yaron
"The regulator should focus on what benefits the consumer, such as transparency and proper management.”
Yaron emphasized that in recent years, the bank has taken a series of steps to promote innovation, efficiency, and competition in the payments market. According to him, these measures helped the Israeli public to cope during the Covid-19 crisis by allowing a quick and efficient transition to payments without physical contact.
The digital shekel?
"If the Bank of Israel decides to issue a digital shekel, it will be a huge change, and we should be prepared for it. And if we decide not to, all the knowledge accumulated in the digital shekel project will help us think about other reforms in the world of payments."
Many technological developments don’t reach the Israeli market, because Israel has a small economy, but there are barriers related to regulation and promoting incentives that can be addressed, he said.
"We’re expected to be one of the first countries in the world to require regulation in the transfer of information between financial entities that is beyond current banking accounts and credit (including deposits, savings, loans, and securities), the BOI governor said in conclusion. "We’re in favor of an open financial world that will include all developers of all financial products, and not just the banking system.”