Bank of Israel Sees Cash as Crucial for Economic Resilience Amid Digital Shift
Translated & summarized from Ice by baba
The Bank of Israel asserts that cash is essential for economic resilience, especially during emergencies like cyberattacks or power outages, despite a slowdown in its growth. While digital payments are expanding, 69% of Israelis wish to continue using cash. The central bank advocates for maintaining cash accessibility alongside digital innovation, navigating a government policy that simultaneously promotes digital payments to fight tax evasion and values cash for emergency preparedness.
The story in 5 lines · by baba
- Cash is vital for Israel's economic resilience during emergencies, according to the Bank of Israel.
- Cash circulation growth slowed to 2% annually in 2024-2025, down from 7% in 2021-2023.
- 69% of Israelis want to continue using cash as a payment method.
- The government faces a dilemma between limiting cash to fight tax evasion and preserving it for emergencies.
- Bank of Israel aims to ensure cash availability alongside digital payment development.
Despite the growing use of digital payment methods, cash remains a central component of Israel's economic resilience, according to the Bank of Israel. In light of security threats, potential cyberattacks, and concerns about disruptions to power and communication infrastructure, the central bank views cash as a vital means for the public and businesses to continue transactions when digital systems are unavailable.
A review by the Bank of Israel indicates that the circulation of cash in Israel grew at an average annual rate of only about 2% between 2024 and 2025. This is a significant slowdown compared to the approximately 7% annual growth seen between 2021 and 2023, reflecting the increasing adoption of digital payment solutions.
Nevertheless, cash continues to be a primary payment method due to its physical availability, instant settlement, simplicity, and liquidity. It allows transactions to be completed independently of technological systems, offering small businesses immediate and final payment. Public sentiment supports this, with 69% of Israelis wanting to continue using cash in the coming years, even as credit cards, payment apps, and digital wallets become more prevalent.
The importance of cash is particularly highlighted in emergency scenarios. Prolonged power outages, communication network disruptions, or cyberattacks could impair the ability to conduct digital payments. In such situations, cash could enable consumers and businesses to purchase goods and services without access to electronic payment infrastructure.
The Bank of Israel emphasizes the need to maintain the availability and accessibility of cash during both normal times and emergencies, while continuing to develop advanced digital payment methods. The policy aims to allow the public a choice in payment methods, preserve public trust in the currency, and ensure the economy can function even during infrastructure disruptions. However, this is complicated by a governmental paradox: the state values cash for emergencies while simultaneously enacting laws to limit its use to combat the black market and tax evasion. This tension between drying up the black economy through digitalization and the existential fear of infrastructure collapse leaves consumers navigating a complex economic reality where cash is both a potential detriment and a lifeline.
