The Bank of Israel has seen a 15.7 percent rise in circulating cash in the six months to August this year as people flock to ATMs.
The last time Israel saw such high demand for cash was during 2009’s global financial crisis, which is unsurprising since cash is key to navigating periods of unrest and disasters (as demonstrated by the United States Federal Emergency Management Agency recommending cash as part of emergency hurricane survival kits).
Most of Israel’s cash rise is in banknotes, which account for 97 percent of the country’s cash in circulation by value. Though there are many more coins—2.7 billion, in fact, compared with 596 million notes at the end of 2019—they account for just three percent of money in circulation by value. The coin most in circulation is the 10 agorot piece, with a share of 1.6 billion, or 176 for every single person in Israel.
The rise of 10 agorot coins has surprised some, however regulations that restrict setting prices with denominations of less than 10 agorot has encouraged merchants to round up (sometimes down…) to the nearest shekel to avoid excess change at the close of trading. The coin’s other primary function is providing change to bus riders paying for tickets in cash, which many elderly customers still do in spite of a general move towards cashless payment.
[The Bank of Israel receives] updates from the Ministry of Transportation on changes in the use of cash and the transition to alternative means of payment on public transportation. This helps it plan its cash supply for a possible decline in demand.