Following "Globes’" revelation of the proposal to abolish the NIS 200 note, and the prime minister’s announcement that a discussion of the matter should be held, the Bank of Israel has issued its first public, and fairly skeptical, comment. The bank, it says, "will present its professional stance on such a move, if it arises for discussion," and stresses that "under the law, the authority to abolish notes lies with the governor." "So far," the Bank of Israel’s announcement continues, "no sufficiently well-founded professional justification has been presented for abolishing this or that note," indicating that it is not enthusiastic about the idea.
In early September, "Globes" revealed that a group of experts had presented a policy document arguing that abolishing NIS 200 bills, which represent the majority of bills used in Israel for accumulating cash, could lead to an increase in state revenues of over NIS 20 billion in a year, a very dramatic sum in the problematic fiscal situation in which Israel currently finds itself because of the war, high interest rates, and the downgrading of the country’s credit rating. The document states, however, that the move would involve mass depositing of all NIS 200 bills within a short time, voluntarily at first, and with rising penalties later on for holding them. Ultimately, the document says, it will be necessary to switch to an entirely cashless society.
According to sources familiar with the matter, there is wide professional support for the idea. "Israel Tax Authority director Adv. Shay Aharonovich is very keen on this. Their weight and their drive on this matter is probably what led to it advancing so quickly. The Tax Authority has for years been pushing for a reduction in the use of cash. The head of the Israel Money Laundering and Terror Financing Prohibition Authority Adv. Illit Ostrowitz-Levi supports it, and support for it can be heard from Ministry of Finance officials as well." Despite all this, it appears that the Bank of Israel is not so keen.
While the Bank of Israel has not given its reasons, and has only said that it will express its professional position if the matter arises for discussion, it seems that many difficulties stand in the way of carrying out such a decision, since there are sectors of the population that use cash extensively, or even exclusively, and do not even maintain bank accounts. Furthermore, the NIS 200 bill is low in value in comparison with the €500 bill, which the EU is phasing out, but which is worth ten times more.
Published by Globes, Israel business news - en.globes.co.il - on September 23, 2024.
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