The Bank of Israel issued the stable currency specification, requiring the reserve ratio to be higher than 100%

It is reported that the Central Bank of Israel issued the regulation rules of stable currency, which follows the digital asset regulation guidelines issued by the Ministry of Finance of the country in November. The Central Bank requires the issuer of stable currency to maintain reserves matching the amount of cryptocurrency in circulation. The document also suggests that the regulatory role should be split among multiple regulatory agencies to improve efficiency, and the issuer of stable currency should obtain a business license. The issuer of a larger stable currency that may have a systemically important position should obtain the permission of the banking regulatory authority, while other issuers should be supervised by the Capital Market Authority.

Interpretation of this information:

The Central Bank of Israel has announced the regulation rules for stable currency, in accordance with the digital asset regulation guidelines issued by the Ministry of Finance. This regulation requires the issuers of stable currency to maintain reserves that match the amount of cryptocurrency in circulation. In addition, the regulatory role for stable currency should be assigned to multiple regulatory agencies to improve efficiency, and a business license is also required for issuers. Moreover, the issuer of a large stable currency that may hold a systemically significant position should obtain permission from the banking regulatory authority while other issuers would be supervised by the Capital Market Authority.

With the introduction of stable currency, the financial system of the country is likely to become more stable. Compared to other digital currencies, stable currency is intended to be more stable and predictable, alleviating the price fluctuations that affect cryptocurrencies daily. The Central Bank’s new regulations are expected to ensure that stable currencies maintain sufficient reserves to back their value. This guarantees that even if the issuer goes bankrupt or experiences a crisis, the currency will remain stable as it is backed by actual assets. This is one of the primary reasons why the country’s Central Bank is encouraging the use of stable currencies.

In addition to maintaining reserve requirements, the Central Bank recommends that the regulatory role for stable currency should be divided among various regulatory authorities. This is necessary because it would enhance the effectiveness and transparency of the regulatory authorities. The issuer of stable currency must also obtain a business license to continue operations, verifying its legitimacy.

Finally, regulators ensure that the issuer of a large stable currency that may have a systemically important position is appropriately supervised by the banking regulatory authority, while other small issuers are monitored by the Capital Market Authority. This ensures that companies that pose a substantial threat to the monetary system will be subject to stricter regulations, vigilance, and monitoring.