Proposal to Abolish 200 Shekel Notes Raises Advocates and Detractors
Background of the Proposal
A recent proposal to abolish the 200 shekel banknote has emerged as a strategic plan to combat the underground economy, increase tax revenue, and disrupt the financial capabilities of criminal organizations. This initiative, introduced by a group of experts in September 2024, gained traction among agencies such as the Israel Tax Authority and the Anti-Mstarty Laundering Authority but faced significant resistance from the Bank of Israel.
Government Response and Concerns
The topic took a new turn when Foreign Minister Gideon Saar expressed urgency in addressing the use of older series of 200 shekel notes, particularly concerning their circulation in Gaza. Saar’s aim was to nullify these old banknotes to inhibit Hamas’s financial resources, emphasizing that these notes had entered Gaza in considerable quantities.
In light of these developments, the Bank of Israel was prompted to clarify its position, stating that the newer series of 200 shekel notes would remain in circulation. The bank underscored that the rationale for abolishing such notes had not met the professional standards required for such a decision and that the authority to do so lies exclusively with the Governor of the Bank of Israel.
Public Disposition and Market Trends
Despite the debate surrounding the abolition of the 200 shekel note, many Israelis appear to be actively discarding these high-denomination notes. Between September 2024 and February 2025, there was a 7% decline in the number of 200 shekel notes in circulation, contrasting with a rise in demand for 100 shekel notes. This shift indicates a growing public hesitance to hold onto higher denominations, which are often viewed as instruments for storing unreported wealth.
The expert proposal suggested a mechanism for citizens to “dispose” of their 200 shekel notes without penalty, allowing them to pay taxes on any accrued profits, after which the notes would be invalidated.
Ongoing Discussions and Future Recommendations
Following Saar’s intervention, the Bank of Israel reiterated that despite the discussions, no substantive justification had been presented for the abolition of either specific series of notes or the banknotes in general. The Bank noted that the proposals did not meet necessary professional criteria and were not coordinated with their institution.
Notably, while the Bank maintained its position on the new series, it refrained from directly addressing the potential for removing specific older series, leaving a door open for further consideration.
Dr. Davy Dishtnik, a senior faculty member at Tel Aviv University’s Faculty of Management, argued that a complete withdrawal of the 200 shekel notes would be more logical than targeting specific series. He suggested that recognizing existing patterns of returning these notes to Israel through trade would warrant a more comprehensive approach, advocating that citizens be encouraged to exchange their 200 shekel notes for smaller denominations legally.
The proposal and subsequent discussions reflect complex dynamics between financial policy, public sentiment, and socio-economic strategies aimed at regulating illicit financial flows and enhancing governmental fiscal capabilities