Experts Back FM Sa’ar’s Proposal To Cancel Series Of 200 NIS Banknotes In Gaza

An expert on Hamas’s economic structure claims that Israel should adopt the proposal of Foreign Minister Gidon Sa’ar and cancel the banknotes it knows were transferred to the Gaza Strip in order to disrupt Hamas’s cash dominance and target the wealth it has accumulated.

Eyal Ofer, explained that Sa’ar’s request that the Bank of Israel cancel the series of 200 NIS notes being used in Gaza could help to cripple Hamas’s economy and harm their ability to purchase weapons.

“Gaza operates as a cash economy,” Ofer explained in a Maariv interview. “Most commerce in the Strip’s markets, including hundreds of stalls trading humanitarian aid, is conducted in cash, mostly using low-denomination bills of 20 and 50 shekels. These bills pass from hand to hand and wear out so quickly that they often end up torn.”

“Gazan merchants today refuse to accept a significant portion of these bills that have deteriorated to the point of disintegration,” he added.

However, the significant sums in the Strip — estimated at about NIS 10 billion — are held in large-denomination bills of 100 and, primarily, 200 shekels.

“These bills were introduced into the Strip over many years, transferred directly from the Bank of Israel to Gaza bank branches, and loaded into local ATM machines,” Ofer said.

“Hamas amassed wealth during the war mainly by collecting protection payments from merchants and UN agencies receiving aid trucks,” he said.

Hamas members, seen riding on the trucks, provided protection services, charging tens of thousands of shekels per truck that Hamas police “secured” against looters.

Ofer noted that Hamas also profited by maintaining control over fuel supplies that Israel allowed Qatar to bring into Gaza from Egypt.

During the ceasefire, tens of millions of liters of fuel were sold at prices ranging from 16 to 24 shekels per liter, rising recently to between 45 and 64 shekels per liter.

Through complete control of Gaza’s wholesale market, Hamas accumulated significant sums in shekels.

“It is difficult to estimate the total wealth Hamas has accumulated, but various assessments, including from security sources, place it at around four to NIS 5 billion shekels during the war,” Ofer said.

He estimated that Hamas had already spent about NIS 1 billion on salaries for its operatives and new recruits. Over time, Hamas has effectively become Gaza’s “shekel bank.”

Gaza’s population receives approximately NIS 150 million to NIS 200 million each month via apps and bank transfers from aid organizations and the Palestinian Authority. However, residents must convert this digital money into physical cash.

“Hamas, which controls the cash market through a network of money changers, supplies these to the public, charging a commission that now reaches as high as 35%,” Ofer said.

Nonetheless, Hamas is believed to still hold a significant amount of cash, mostly in 200 shekel bank notes.

“We are proposing a different method than military force alone. Gaza’s economy is currently in turmoil, and we suggest a unique strategy,” Ofer explained.

The Bank of Israel knows exactly which serial-number series of banknotes were transferred into Gaza, he said.

Since the Strip functions as a closed economy, most of these notes remained inside and are now largely in the hands of Hamas, major merchants, and money changers.

The proposal calls on Bank of Israel Governor Prof. Amir Yaron, whose signature appears on the notes, to cancel the specific series transferred to Gaza.

In rare cases where some bills trickled into the Palestinian Authority, the plan would not harm those outside Gaza. Such bills could easily be exchanged at banks, Ofer said.

“It would also be simple to develop an app enabling the public to scan 200-shekel notes and verify if they need to be exchanged,” he added.

Ofer stressed that “It is difficult to precisely predict what the impact of such a plan would be on Hamas.

However, he noted, “Even now, the proposal is already creating a psychological impact within Gaza’s internal discourse.”

“We propose launching a pilot program by canceling a small number of serial-number series to gauge the results and verify whether such bills are found outside Gaza.”

As time progresses, more series could be invalidated, potentially collapsing Hamas’s accumulated wealth.

“If the move succeeds, Israel could even propose a deal: to accept canceled banknotes only in exchange for the return of the hostages,” he concluded.

Former Accountant-General in the Finance Ministry Dr. Yaron Zalakha also agreed with Sa’ar’s proposal:

“This time Gideon Saar is right. The Bank of Israel should quickly replace the 200 NIS bill with a new bill in a new color, with the exchange for the new bill to be done only at bank branches and under supervision. The old bill that was not exchanged through the banks should be removed from circulation. A quick move will not allow Hamas, as well as local criminal organizations and money launderers, to prepare. It would be better for the Bank of Israel to wake up which has caused enough damage to the Israeli economy over the past decade and a half,” Zalakha said.