In the final analysis this cost is of course borne by the taxpayer, and I believe that the last thing the government wants to do is to raise the tax burden in such a roundabout way. We should bear in mind that we cannot evaluate in advance the importance of such a course of action.
We know that on the last occasion, the Bank of Israel purchased $ 16.5 billion. An increase of only $ 1 billion in the money supply would currently mean a rise of about 4 percent, whereas an annual increase of 10 percent is considered too fast. The simplest solution is to abolish the exchange-rate band.