Bank of Israel pushes back on plan to cripple Hamas by withdrawing 200 shekel bills

Israel’s Foreign Minister threatens to have Knesset legislate end of 200 shekel bill if Bank of Israel refuses to back plan to hamstring Hamas financially.

By Batya Jerenberg, World Israel News

Israeli Foreign Minister Gideon Sa’ar renewed his call Sunday for the Bank of Israel to take out of circulation the NIS 200 bill in order to render worthless Hamas’ massive reserves of the bill, which it uses as its main form of currency.

In a letter to Prime Minister Benjamin Netanyahu, he asked for an urgent meeting with Bank of Israel Governor Amir Yaron, the ministers of defense and finance, and members of the National Security Council and the Israeli tax and anti-money-laundering authorities due to “the urgent need to promote the economic war against Hamas.”

“If the Bank of Israel continues its refusal to cooperate with the measure, I will suggest exploring its advancement through a government decision and legislation, if need be,” he wrote.

Sa’ar had suggested on Thursday that the entire bill, or at least certain series of it that are known to be flooding the Gaza Strip, be cancelled.

This move, he wrote to Yaron, “will dramatically harm Hamas’s economic capacity, will create significant difficulties in paying salaries to its operatives, and will harm its ability to recruit additional terrorists to its ranks, its ability to acquire ammunition and logistical supplies, maintain governance functions and buy the loyalty of its supporters.”

“Such a heavy economic blow could make a substantial contribution to achieving the goals of the war – eradicating Hamas as a military and government entity and returning the hostages home,” he emphasized.

Financial Immunities Chairman Dr. Adam Reuter, one of the financial experts championing the idea, told Globes, “We discovered that we know the serial numbers of almost all the bills in the Gaza Strip. They received the shekel bills via Brinks trucks from Israeli banks, so there is a record of them all.”

“During the war, Hamas robbed all the banks in Gaza,” he added, “and it also taxes all the financial transactions that go through the merchants and the gangs that have seized control of the food and fuel. Hamas is currently sitting on a mountain of cash worth NIS3-4 billion, almost all of it in NIS 200 shekel bills.”

If this money suddenly becomes worthless, he said, Hamas “will be stressed out.”

Other economic experts believe it would better to cancel the existing bill entirely as that is more efficient and safer for people’s pockets in the long run, considering the difficulty in always needing to check serial numbers on the bills.

Sa’ar’s two-tiered proposal was immediately backed up by Netanyahu and Finance Minister Smotrich.

Yaron, however, immediately rejected the idea, saying that he did not believe there was “a sufficiently well-founded professional justification for canceling any banknote” and that the “feasibility for implementation does not exist.”

While central banks do not willy-nilly cancel banknotes, Israel’s history is replete with such moves involving its entire currency, such as when one-, five- and ten-shekel notes became coins, and the lira became the shekel, which in turn was changed to the New Israeli Shekel.