Since September 2024 there has been a dramatic decline in the number of NIS 200 bills held by the public relative to the number of NIS 100 bills, according to Bank of Israel data. It was in September that “Globes” revealed an initiative by a group of economists and experts, calling for the abolishment of the NIS 200 bill in order to combat black money. The report led to mixed reactions by Israeli economic organizations, but experts say that the very discourse caused panic and persuaded many to get rid of their NIS 200 bills.
The total amount of cash in Israel has even fallen significantly since September 2024, by 4.7%, and has also increased by less than 2% over the past year – the most moderate increase recorded by Bank of Israel data since 2001.
The rising star
Israel’s NIS 200 bill is the biggest denomination in circulation in terms of value and volume. “Most of the black money is hidden in these banknotes,” Dr. Adam Reuter, chairman of Financial Immunities told “Globes.” Reuters conceived the plan to cancel the NIS 200 bill and formed a team of experts and former senior officials from financial institutions, regulators, academia, and even the Mossad to push for its implementation.
According to Nurit Zeevi, one of the plans proponents, “It can be assumed that the vast bulk of the cash that is not used for actual purchases is used to accumulate capital and evade taxes. Ultimately, people will buy a car, an apartment, or launder it in some other way.”
Therefore, the plan proposed allowing people to deposit the cash – initially during a “grace period” during which tax could be paid without criminal proceedings, while subsequently sanctions would be introduced.
On the eve of the proposal, the public held bills worth NIS 132 billion, with 80% of the value in NIS 200 shekel bills, kept to preserve value, and less for daily trading.
Reactions to the plan were mixed. Several weeks later, Prime Minister Benjamin Netanyahu issued a directive to the Minister of Finance, the Governor of the Bank of Israel, the Director General of the Prime Minister’s Office, and the heads of the Tax Authority and the Headquarters for Combating Crime in Arab Society to convene a discussion to cancel the NIS 200 bills. Officials at the Tax Authority and the Ministry of Finance also expressed support for the plan.
On the other hand, a few days after the directive, the Bank of Israel poured cold water on the plan, claiming that it had not been presented with sufficient reasons for it, and stressing, “The NIS 200 bills in circulation, like other bills and coins, continue and will continue to be used as usual.”
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Regardless, the market was quick to react, and NIS 200 bills began to be spent or converted to foreign currency.
This can now be seen in the Bank of Israel data. Sincxe September, when the policy document was issued, the number of NIS 200 bills declined, while the number of NIS 100 bills increased. If in September there were 2.5 times more NIS 200 bills than NIS 100 bills, then in the latest available data (January 2025) this ratio fell sharply to less than 2.2, bucking the long-term trend of a growing gap in favor of NIS 200 bills.
Overall, the proportion of bills held by the public has fallen by about 4.7% since September, which is 6.2 billion shekels. According to Bank of Israel data, this is still a 2% increase in the amount of cash, but it is the most moderate annual increase recorded since 2001, the earliest year for which data are available on the Bank of Israel website.
No protection against inflation
Dr. Adam Reuter who initiated the plan tells “Globes,” The dramatic drop in the ratio of NIS 200 to 100 bills stems precisely from the discussions that arose following our proposal. I heard from sources connected to people who are hiding money that it alarmed many. There was a rush to money changers to buy dollars in exchange for NIS 200 bills, and many are no longer willing to accept such bills as payment. This also stems from an increase in the volume of counterfeit NIS 200 bills, which leads to less demand for them. All of this makes it more difficult for tax evaders and brings to the surface information that helps collect real taxes.” He also says that “elements in the Tax Authority are connecting the dots.”
Dr. David Disatnik, Assistant Professor at Tel Aviv University’s Collier School of Management and a member of the Tel Aviv-Yafo City Council, also believes that, “Discussions about canceling NIS 200 bills starting in September is probably the main or strongest reason for their decline in proportion compared with NIS 100 bills. This is the way to explain why there was a decline in September in particular.”
However, he adds that there are other supporting factors: “Inflation, which reached 3.8% in the past year, means that holding cash is much less profitable. The main use of the NIS 200 bill is to preserve value, and inflation, together with the interest rates offered by banks and other financial instruments, means that the cost of holding cash, especially high-denomination notes, is particularly high.”
Despite the significant decline, the public still holds a considerable amount of cash: NIS 127 billion in bills, and NIS 3 billion in coins. All this while electronic payment methods are more available than ever, the Cash Law limits large transactions (over NIS 6,000), and inflation is rapidly eroding any amount accumulated in physical coins and bills.
It won’t disappear so quickly
The Ministry of Finance and the Israel Tax Authority would probably be happy to see a real decrease in the value of cash held by the public, as part of the fight against tax evasion and illegal transactions, which are easier to conduct using cash. And yet the value is only increasing. Although very slowly, it seems that at least for now – banknotes in wallets and under counters are not disappearing so quickly.
It is also worth remembering that both the Palestinian Authority and the Gaza Strip are part of the “shekel bloc”, and the new Israeli shekel is the currency traded there. There, of course, it is much more difficult to enforce laws like the Cash Law.
The Bank of Israel said, “The role of the Bank of Israel, by law, is to issue currency, regulate and direct the currency system and ensure a regular supply of cash to the economy, in routine and emergency situations. The Bank provides the public with banknotes in four denominations (NIS 20, 50, 100 and 200), in accordance with the existing demand in the public as received from the banking system.
“The cash circulating in Israel increases every year, and in 2024 the growth rate was approximately 2%. Data about the currency system, including circulation data, are presented monthly for end-of-month data and by value, and are published to the public on an ongoing basis on the Bank’s website.”
Published by Globes, Israel business news – en.globes.co.il – on February 18, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
