With the Israeli government considering the cancelation of NIS 200 bills to fight the black economy and tax evasion, some Israelis are reportedly already taking action. Even though the Bank of Israel has poured cold water on the idea, saying "No sufficiently well-founded professional justification has been presented," there are reports of shopkeepers and businesses refusing to accept NIS 200 bills and of a big increase in Israelis changing NIS 200 bills for foreign currency.
Under the terms of the idea, the NIS 200 bill would be abolished as legal tender at short notice with holders required to deposit them in banks. At the same time a voluntary disclosure plan would be launched with no criminal proceedings brought for tax evasion. Some economists have said that such a move could net the Israel Tax Authority as much as NIS 22 billion although others say such forecasts are wildly optimistic.
Either way some members of the public and businesses are already in a panic. Global money transfer company GMT VP operations and sales Eran Ben Manda told "Globes," that over the last two days a six-fold increase in demand for foreign currency has been seen. "Following the announcements about the government's intention to abolish the NIS 200 bill, we are faced with tremendous demand from the public who want to convert shekel bills into foreign currency. Many of the people who want to make conversions are Israelis who stocked up on cash following the war."
Although no decision has been taken to cancel the bill, on the ground, the fear of such an eventuality is expressed in the refusal of some business owners to accept NIS 200 bills. For example, last Sunday, a customer of a bakery in the center of the country posted on his Facebook page that when he came to the cash register to pay with the blue bill, the cashier refused it, claiming the bill "might be forged." In the same post, he wrote: "This is a note that I just took out of the bank, and it has no value. It's a real shame and seems illegal to me. You don't have to be a genius to understand that it's because they want to take this note out of circulation." Another example from social media is a customer who was asked to pay her pedicurist with two NIS 100 bills rather than one NIS 200 bill.
One anonymous source told "Globes" that a few days ago their mother handed out lots of NIS 200 bills to her grown children and told them to spend them before they were taken out of circulation.
According to data from the Bank of Israel, NIS 200 bills make up nearly 80% of the value of cash held by the public. This money is not used for payments, but for hoarding money, often as a way of evading tax. According to a study by the European Central Bank based on data from 2008, only a third of the bills in the hands of the public were used for actual payments, and the rest as a way of hoarding money.
Published by Globes, Israel business news - en.globes.co.il - on September 26, 2024.
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