Dec 25, 2017

cash being minimized

There has been increased talk about finding stricter ways to crack down on money laundering.

The main strategy is to minimize the usage of cash. The question is how to accomplish that.

One method being considered by the Bank of Israel and the Treasury Department is to create some sort of digital shekel.  I guess that would be something similar to Bitcoin, but to be used within Israel, that would replace cash.

Another method is an approach being advanced with a law proposal that would limit the amount of cash allowed to be used and require reporting for sums of cash greater than that. After some debate and compromise, it seems the law being advanced will limit cash transactions to a maximum of 5000NIS between consumers and bsuinesses, and to 25,000NIS between private individuals.

the main communities expected to be hurt by this are the Arab and Haredi communities, as a lot of transactions in these communities are done with cash - for a number of cultural and practical reasons. MK Gafni agreed to this after the initial proposal would have limited cash between individuals to much smaller numbers than what was finally agreed upon - I guess the 25k is acceptable enough to him.

Limiting cash will be a big deal. If they move to crypto and digital currencies, they will also have to take a lot of cash off the street and out of the currency, minimizing its availability. Even if they do not move to digital currencies, limiting cash will make it difficult for many in these communities to function. It might even hurt the country as less foreign currency will find its way into Israeli hands and move through the local markets.

the globalization of markets is moving the world towards big changes...


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