Creating new perspectives since 2009

Israel: judicial reform concerns push people to move money abroad

February 16, 2023 at 11:48 am

This picture taken on August 23, 2022 shows a view of the exterior of the headquarters of the Bank of Israel, the country’s central bank, in Kiryat Ben-Gurion in Jerusalem [Ahmad Gharabli/AFP via Getty Images]

Economic experts and bankers have warned that concerns about the Israeli government’s judicial reforms are pushing individuals and companies to move money abroad, Ynet News reported on Wednesday. Around $4 billion has apparently been transferred out of Israel to foreign banks in the past three weeks.

According to anonymous sources cited by Ynet, most of the outflowing capital was transferred to Europe and the United States, and mostly by individuals rather than institutions. “Until now there are no unusual movements of funds abroad,” said the Bank of Israel. “The bank is constantly monitoring the situation.”

Ofir Angel, chairman of financial consulting firm Auren Israel, said that if the exodus of capital continues to gather steam there are fears that the government may try to restrict the movement of money out of the country, or that banks may place caps on the movement of foreign currency.

“I do not trust this government,” an unnamed individual told Ynet. “I’m not on the left or the right. I’m Israeli, but I’m concerned that the reforms will badly harm the economy and the Shekel. Therefore, my money will be worth a lot less very soon; we can already see that trend now.”

Yedioth Ahronoth reported that some Israelis holding between $5-50 million in liquid assets, were exploring the possibility of applying for foreign citizenship in order to hedge their wealth by transferring some of their capital to bank accounts in other countries.

Leading bankers in Israel warned Finance Minister Bezalel Smotrich on Tuesday of potential damage to the economy caused by the government’s moves to curtail the powers of the judiciary. Huge demonstrations have taken place across Israel in protest at the government plans, with claims that the reforms will destroy Israeli democracy.

READ: Israel justice reforms spark tech investor flight fears