Cashing Out: The Future of Israel

The key focal issue is “Future of cash ” which means assessing the role of currency in Israel’s economy, predicting its future and storage costs and to what extent economy can withstand cashless transaction.

Currency printing is associated with huge storage, machine and printing cost. Thus, Bank of Israel is looking towards minimizing the currency cost for many reasons and one of the prominent reason is monitoring of currency that is used in underground economy.

Note: Managers/management must think form two perspective. First one is to find an uncontested market space where competition and pressure is minimum with decreased margins. Second, play along the defined boundaries of market which means high competition from existing and new competitors, which means low profits and high cost and margin.

Driving forces that will have an impact on the key focal issues are many, namely,

 Preference of cash, notes, bills by common consumers.

 More the transaction is through digital payments, majority of people who are devoid and unaware of such services will lose the confidence and refrain from using the technology.

 Due to cyber crimes on the rise, many elder section of people prefer cash for their ease.

 Cost incurred in security for keeping tab on forgery and counterfeit.

 Privacy can be maintained if one refrains from using cards like Visa, Mastercard which are on rampant spree to sell the data to 3rd party.

 Globalization opened doors to China, India, Malaysia, Singapore and other emerging economies which compete in the high cost market alongside US and UK.

 Keeping tab on black money is easy with less currency notes on roll.

 If money is stored digitally, negative interest rates can be implemented.

 Niche market and accelerated technological innovations and advances improving industrial productivity.

 Growing commoditization of products and services have put the necessary pressure to involve currency in the loop

 Consumer behavior is evolving because of technological innovations access to information, market transparency.

Though there are pros and cons of currency and digitization the overall concern can be summed up to the main factor which is cost reduction. Once an economy has enough money at hand it can use it towards other important aspects.

Ranking of driving forces based on uncertainty and degree of importance:

1) Currency printing and distribution costs- Currency elimination was considered inorder to decrease