The following documents contains summaries of the annual reports of the Bank of Israel Currency Department, where available.

2006

The Annual Report of the Bank of Israel Currency Department shows that currency in circulation, i.e., banknotes and coins in the hands of the public and in bank tills, totaled NIS 25.5 billion at the end of 2006, compared to NIS 24.4 billion at the end of 2005, an increase of 4.6 percent. The average rate of growth in the period 2001 to 2006 was 10 percent, and so the lower rate may have been a correction to the relatively higher rate––of 17.5 percent––in previous years. The main factors behind this rise were the higher use of cash for transactions, growth in the economy and an increase in population in 2006.

The year 2006 saw a further increase of cash withdrawals from machines: the number of ATMs increased as did the number of cash dispensers––cash-withdrawal machines owned by private companies and operated by the businesses where they are sited. At the same time there have been newer options of cash withdrawals through retail chains and at gas stations. The banks also introduced automatic machines for depositing cash.

According to the Bank's data, banknotes continue to comprise 96 percent of the value of currency in circulation, and coins make up the balance. More than half (51 percent) of coins in circulation were 10 agorot coins, used, inter alia, for change on local public transport. The NIS 1 coins, many of which are used for parking meters and vending machines, constituted 23 percent of all coins in circulation in 2006. The share of higher value coins­­––NIS 5 and NIS 10––fell, with each accounting for only 3 percent of total coins in circulation.

A not inconsiderable number of coins in circulation get lost, and so the actual use is less than that recorded. Loss is a natural consequence of heavy daily usage of coins, which are a low-value means of payment. The rate of loss is inversely proportional to the value and size of the coin. Estimates for the loss of coins in circulation range between 41 percent and 77 percent for the 5-agorot, 10-agorot, ½-sheqel and NIS 1 coins.

The use of the NIS 200 banknote is becoming more and more prominent, accounting for 18 percent of total notes in circulation, up from 17 percent, and they are more widely distributed through ATMs. The most widely used banknote continues to be the NIS 100 note––accounting for 53 percent of all banknotes in circulation––and its rate of usage did not fall despite the greater use of the NIS 200 note. The proportion of NIS 50 banknotes out of total notes in circulation continued falling last year, from 20 percent to 19 percent, while the use of the NIS 20 note remained at 10 percent.

Supply of notes is made up of meeting demand for a particular note, and replacing old notes lost through wear and tear. Supply of NIS 20 note is devoted almost entirely to replacing old notes due to its absence from ATMs––the ATM serving as a conduit to introduce new banknotes into circulation––its high usage in markets and the public's lack of safekeeping. To improve the life of the NIS 20 banknote, the Currency Department released an improved banknote in 2006 printed on higher quality paper with additional coating. As part of this improved quality, the Currency Department will be issuing the next issue of NIS 20 notes based on polypropylene, a polymer which is becoming more popular in many countries due to its durability.

In recent years the rate of banks' depositing banknotes and coins at the Bank of Israel has diminished, due to a fall in the rate of deposit on the one hand and the increase in cash circulation on the other. Hence the time spent in circulation has increased, which has also pushed up the rate of wear and tear of notes deposited at the Bank of Israel. This can be explained, inter alia, by the banks' more efficient working practices in recent years: aiming to reduce the costs of transporting cash to the Bank of Israel, the commercial banks have purchased their own counting and sorting machines, increasing the circulation of banknotes in the economy.

In 2006, the Currency Department of the Bank of Israel prepared a plan to improve the quality of banknotes in circulation through a change in policy of cash operations. The aim of the policy is to maintain a high quality of cash in circulation, while providing a higher level of service to customers of the department. The plan will be introduced gradually, starting in 2008.

As part of the plan to reduce the public's cash operating costs, the department will introduce coins already packaged in rolls. This will bring uniformity in coin packaging––the coins will be delivered from the minters abroad already wrapped in rolls––and a saving in costs and labor input, as well as convenience and safety in transporting. At the same time, the department plans on making banks deposit their coins in canisters, which would make banks' packaging more efficient and will improve safety in the Bank of Israel's sorting and counting process.

The Bank of Israel requested permission from the government, as required by law, to abolish the 5-agorot coin, due to low usage, high production costs––up to three times the face value of the coin––and the fact that it is not used in packing meters and vending machines. According to a survey carried out, 80 percent of the public approve abolishing this coin.

In 2006 the Currency Department continued with the process of introducing a new NIS 2 coin. The issue process will be completed in the next few months and the coin is expected to be brought into circulation by the end of 2007. The addition of the NIS 2 coin will make cash payments more efficient, particularly for the heaviest users, and will reduce spending on currency issues, so that expenditure on manufacturing and maintenance of cash will fall.

In 2006, the NIS 200 notes began to feature the signatures of the Governor of the Bank, Professor Stanley Fischer and the Chairman of the Bank of Israel Advisory Council, Aharon Fogel.

In 2006, the Bank of Israel issued three commemorative coins and one set of uncirculated coins.

Following the government's decision to privatize the Israel Coins and Medals Corporation, which according to the law holds the exclusive rights to commemorative and uncirculated coin issues, there is a need to amend the law accordingly. Hence discussions were held between the Bank of Israel, the Government Companies Authority, and the Israel Coins and Medals Corporation, in order to establish the most suitable conditions for the company's sale. The process is almost complete and the Ministry of Finance will begin the privatization shortly.

In 2006 the Currency Department began planning a new banknote issue series, which includes many aspects, including changing the banknote design, improved security features and quality of banknote paper. The new series is planned to be issued in the next 4-5 years.

In 2006, the Currency Department published Banknotes and Coins of Israel, 1927-2006, a book that presents the history of Israel's coins and notes from the British Mandate period until the present period, including details––from size and weight (of coins), design and name of designer to date of issue and last date of use––of all coins and banknotes issued.

Currency Department - Annual Review 2005

A new NIS 2 coin will be minted within a few months

The Annual Report of the Bank of Israel Currency Department shows that currency in circulation, i.e., banknotes and coins in the hands of the public and in bank tills, totaled NIS 24.4 billion at the end of 2005, compared to NIS 20.8 billion at the end of 2004, an increase of 17.5 percent, a higher rate of growth than in previous years. (Between 2002 and 2004, currency in circulation grew by an annual average rate of 7.2 percent). The main factors behind this rise were the higher use of cash for transactions, growth in the economy and an increase in population in 2005.

According to the Bank's data, banknotes continue to comprise 95 percent of the value of currency in circulation, and coins make up the balance. More than half (51 percent) of coins in circulation were 10 agorot coins, used, inter alia, for change on local public transport. The NIS 1 coins, many of which are used for parking meters and vending machines, constituted 22 percent of all coins in circulation in 2005. The higher value coins¬¬––NIS 5 and NIS 10––accounted for only 3 percent each of total coins in circulation.

A not inconsiderable number of coins in circulation get lost, and so the actual use is less than that recorded. Loss is a natural consequence of heavy daily usage of coins, which are a low-value means of payment. The rate of loss is inversely proportional to the value and size of the coin. Estimates for the loss of coins in circulation range between 41 percent and 77 percent for the 5-agorot, 10-agorot, 1/2-sheqel and NIS 1 coins.

Greater use of NIS 100 and NIS 200 banknotes

The proportion of NIS 20 and NIS 50 banknotes used in circulation fell during the year, while the use of the higher value banknotes, NIS 100 and NIS 200, increased with economic growth.

The banknote with the highest rate of wear and tear was the NIS 20 note, due to its absence from ATMs––the ATM serving as a conduit to introduce new banknotes into circulation––its high velocity of circulation and the public's lack of safekeeping. To improve the life of the NIS 20 banknote, the Currency Department released an improved banknote in 2006 printed on higher quality paper with additional coating.

The year saw an increase of cash withdrawals from machines: the number of ATMs increased and cash dispensers––cash-withdrawal machines owned by private companies and operated by the businesses where they are sited––were introduced; at the same time there have recently been newer options of cash withdrawals through retail chains (in particular at gas stations).

Though December 31, 2005 was to be the last date for converting old banknotes of the new sheqel series (Series A), the Bank of Israel extended this period to 31 December 2010, as the public continued to hold significant quantities of the old series banknotes. This series came into circulation in 1985 and was replaced in 1999.

As part of the campaign against counterfeit money, the Bank of Israel, the Israel Police, the banks and the Banks Association set up a joint Forum Against Forgery, to prevent and locate counterfeiting. At its meetings, the forum discusses cases of counterfeiting that have occurred, and ways to improve the campaign against counterfeiters and those that distribute counterfeit money.

In 2005 the two branches of the Currency Department––Jerusalem and Tel Aviv––were merged. Services to the public are now provided only by the Jerusalem branch as the Tel Aviv branch could no longer meet the requirements of the Bank of Israel and the banks, due to considerations of security, cost saving, streamlining deposit procedures and improving work procedures. At the branch, the public can exchange defective currency and also exchange old series banknotes for new.

Coming soon: NIS 2 coin

In 2004 it was decided to introduce a new coin denomination––NIS 2––and the process accelerated in recent months with the convening of the Advisory Committee to the Bank of Israel, whose counsel is required by law before the final approval of the coin by the Minister of Finance. The issue process for the new coin will be completed in the next few months. The addition of the NIS 2 coin will make cash payments more efficient, particularly for the heaviest users, and will reduce spending on currency issues, so that expenditure on manufacturing and maintenance of cash will fall.

As with other coins in circulation, the design of the new NIS 2 coin was based on ancient Jewish coins of Yehochanan (John Hyrcanus), and depicts the double cornucopiae (or horns of plenty). The cornucopia is an ancient symbol from the Hellenic period when it appeared on coins and artworks. It is a hollow, animal's horn filled with fruit and grain and it has become a symbol of plenty.

New issues

In 2005 the Bank of Israel issued five commemorative coins and one set of special coins: an Independence Day Coin, 5765–2005, "The Golden Age"; a coin in the "Bible Art" Series, 5765–2005, "Moses and the Tablets of Stone"; a special gold edition of a coin in the "Bible Art" Series, depicting "Jacob and Rachel", 5764-2004; a coin commemorating Naomi Shemer, 5765-2005; a coin marking 100 years of the Theory of Relativity and 50 years since the death of Albert Einstein, 5765-2005; and a set of Hanukka coins, 5766–2005.

Numismatic exhibition in the Visitors' Center

The Bank of Israel is currently constructing an educational Visitors' Center where it will present the activities and policies of the Bank of Israel in the Israeli economy. As part of the center, there will be a rich numismatic exhibition, displaying the history of money from the invention of the first currency in the 7th century BCE up to today.

Currency Department publication

The Currency Department recently published Banknotes and Coins of Israel, 1927-2006, a book that presents the history of Israel's coins and notes from the British Mandate period until the present period, including details––from size and weight (of coins), design and name of designer to date of issue and last date of use––of all coins and banknotes issued.

The reverse side of the new NIS 2 coin

[The picture appearing in the original report has been omitted.]

The obverse side of the new NIS 2 coin

[The picture appearing in the original report has been omitted.]

The pictures here are not to scale. The coin will be silver colored with a ring diameter of 2.16 cm (compared to 1.8 cm of the NIS 1 coin and 2.4 cm of the NIS 5 coin).

Currency Department Annual Report for 2004

The Annual Report of the Bank of Israel Currency Department shows that currency in circulation, i.e., banknotes and coins in the hands of the public and in bank tills, totaled NIS 20.8 billion at the end of 2004, a real average increase of 8.7 percent, compared with a rise of 3.7 percent in 2003. The reason for the rise was the public's increased demand for cash, apparently against the background of the economic recovery. The amount of currency in circulation changes according to public demand, and is expressed by the banks' withdrawals from and deposits with the Bank of Israel.

Banknotes comprise about 95 percent of the value of currency in circulation, and coins make up the balance. The effective part of the latter is even smaller, as coins get lost. The NIS 50 and NIS 100 notes are the most common denominations of banknotes, and the 10 agorot and NIS 1 are the most common coins. In 2004 these four denominations of notes and coins accounted for 73 percent of the total number of banknotes and coins in circulation. The shares of banknotes of different denominations in the total changes from year to year, whereas the shares of the various coins remain quite constant over time.

Eighty-one percent of the consumption of banknotes is attributable to spoiled notes. This high level indicates the need for banknotes to be treated with greater care, for example to be kept in wallets or pocketbooks prior to usage. This would improve the quality of the banknotes in circulation and lower the level of spoiled notes, and thus lead to savings in the cost of issuing money.

In 2004 it was decided to introduce a new coin denomination––NIS 2. The intention is to cut the expenses of coin issue, and to make cash payments by the public more efficient. The issue of the new coin is now at the stage of a competition between designers for the design of the coin. With the completion of this stage, the formal legal procedures required to place the coin in circulation will be followed.

In 2004 the Department took steps to streamline the work procedures in the branches prior to the merger of the Jerusalem and Tel Aviv branches. Hitherto the services offered by the Bank of Israel Currency Department to the commercial banks and the public were provided by two branches, one in Jerusalem and the other in Tel Aviv. Since the premises in which the Tel Aviv branch was located could no longer meet the requirements of the Bank of Israel and the banks, and due to considerations of security, cost saving, streamlining deposit procedures and improving work procedures, it was decided to cease the activity of that branch vis-a-vis the public. In January 2005 activity in the Tel Aviv branch ended, and the services to banks and the public are provided from the Jerusalem branch, which was extended and renovated and brought into line with current requirements. The branch is open from Sunday through Thursday, 08:00 to 13:30.

In 2004 the Bank of Israel issued three commemorative coins and one set of special coins: an Independence Day Coin, 5764–2004, "The Children in Israel"; a coin in the "Bible Art" Series, 5764–2004, "The Burning Bush;" a coin marking the Olympic Games held in Greece, 5764–2004; and a set of Hanukka coins, 5764–2004.

The Bank of Israel has a collection of numismatic items, some of which were displayed until recently in the Numismatic Exhibition in the Bank's premises in Jerusalem. The exhibition featured banknotes and coins of the State of Israel and of Palestine under the British Mandate, as well as coins minted in ancient times, from the Persian period to the Ottoman period. In the light of the decision to establish a Visitors' Center in the Bank of Israel, which will incorporate the numismatic collection, the exhibition was dismantled recently, and will be displayed anew when the construction of the Visitors' Centre is completed.