Courtesy of JNS. Photo credit: Nati Shohat/Flash90
A 200 shekel bill, Feb. 7, 2016
(JNS) — The Bank of Israel has no intention of canceling the 200-shekel bill, according to a Thursday press release.
The release came in response to a directive issued last week by Israeli Prime Minister Benjamin Netanyahu during a meeting of the Knesset subcommittee on advancing the fight against crime in the Arab sector. The Israeli premier directed the committee members to jointly examine the possibility of abolishing Israel’s highest-denomination banknote. Members included Finance Minister Bezalel Smotrich, Bank of Israel Governor Amir Yaron, Prime Minister’s Office Director-General Yossi Shelley, the Tax Authority and the PMO staff.
According to the PMO, this directive was part of a fight against “black money” — non-declared income.
According to the central bank’s statement on Thursday, “No sufficiently established professional justification to cancel any banknote has been presented to the Governor [of the Bank of Israel].”
Therefore, the governor “does not intend to use his authority to work toward canceling any banknote or to change the mix of banknotes in circulation.”
According to a report in Israeli business daily Globes, the premier’s investigation into the issue of 200-shekel banknotes was influenced by a proposal submitted to the Finance Ministry in early September by several high-ranking businesspeople and former senior government officials. These included Hisunim Finance chairman Adam Reuter, Udi Levi, former head of Mossad’s Economic Warfare Division, former Israel Securities Authority chairman Moshe Terri, engineer and entrepreneur Nurit Zeevi and Eyal Ofer, an expert in money transfers in black economies.
The proposal claimed that a significant portion of cash accumulated in 200-shekel bills is used to evade taxes, and that discontinuing the bills would disincentivize tax evaders.
“In a modern country where there is a strong banking infrastructure, there is no reason for a business owner to hold a lot of cash because it makes him an easy target for robbery,” said Reuter, according to Globes. “The [business owner] who has evaded taxes until now will be forced to stop hoarding cash and will have both a stick and a carrot to start paying taxes.”
According to the Globes report, the proposal included several other ways to prevent citizens from hoarding capital, such as using artificial intelligence tools to track illegal financial activity and banning the large-scale use of cash substitutes, such as precious metals.
