Israel will not decide on issuing a central bank digital currency (CBDC) until the European Central Bank (ECB) makes its move, according to Deputy Governor Andrew Abir of the Bank of Israel.

The decision hinges on the ECB's potential introduction of a digital euro, which could trigger a wave of similar moves by other countries.

Israel recently launched a Digital Shekel Challenge to explore potential uses in payments, while emphasising that no final decision has been made.

With 134 countries researching CBDCs, the EU has been notably proactive, proposing legislation for a digital euro last year.

Abir mentioned that public adoption of a digital shekel remains uncertain, and the central bank is studying behavioral responses to ensure strong use cases.

The main goal is to foster competition in a market dominated by two large banks controlling over 60% of transactions.