1) This is only $1760 at current exchange rates. That is a pretty low limit for cash. Unmentioned in you excerpt is the the private transaction limit is now NIS 15,000 ($4400) and car purchases are cash limited to NIS 50,000 (14,667). These are still pretty low and frankly none of a governments business. Reporting large cash transactions, given frequent use in crime, is reasonable, but prohibitions are not.
2) I concur with your bullfrog comment, however I recommend that in the future you post it separately. My fist impression was that it was in the article cited and it was not.
Criminals also frequently drink water - so (by that logic) all citizens should be required to report their consumption of water!
Regards,