Israel Seeks to Curb Cash Use to Combat Black Market

The Israeli government is actively working to reduce the use of cash within the economy, primarily to combat the significant "black market" and illicit activities it facilitates. Professor Dan Amiram, former dean of Tel Aviv University's business school, explains that while cash transactions are declining globally at points of sale, people are increasingly hoarding physical currency. This trend intensifies during crises, such as the COVID-19 pandemic and recent conflicts, where citizens stockpile cash akin to essential supplies, fearing potential power outages that would render electronic transactions impossible.

Amiram highlights that Israel's "black economy," encompassing undeclared income, bribery, and illegal trade in drugs and weapons, is estimated to be a quarter of the national economy. The government views cash as the primary enabler of this underground economy, providing the anonymity necessary for illegal dealings. Legislation aimed at curbing cash usage is intended to disrupt these criminal activities, with the fight against the black market being the main justification cited by Western nations for similar measures.

The article also touches upon the public's preference for holding cash during uncertain times, citing the recent war as an example where concerns about infrastructure collapse led to fears that credit card usage and ATM withdrawals would be impossible without electricity. This contrasts with the declining use of cash at points of sale, indicating a complex dynamic where cash is both being phased out of legitimate commerce and increasingly held as a perceived safe haven during emergencies.