Issuing currency and regulating and guiding the cash system of the economy

Section 44(a) of the Law grants the Bank of Israel the sole right to issue currency in Israel (banknotes, coins, and commemorative and special coins). The quantity and value of banknotes and coins in circulation are affected by several factors, such as changes in the extent and number of transactions, the rate of inflation, population growth, and the use of automated teller machines, checks, and credit cards.

Section 4(6) of the Law states that one of the bank's functions is "Issuing Currency and regulating and guiding the cash system of the economy". Accordingly, one of the functions of the Currency department is to ensure a regular supply of banknotes and coins in accordance with public demand. This involves action on several levels:


Planning denominations - Planning the appropriate denominations of banknotes and coins that will concurrently enable the public to carry out its cash transactions efficiently and minimize the cost of issuing new currency.

Designing banknotes and coins - The Governor of the Bank of Israel determines the form of banknotes and coins with the approval of the Administrative Council and the Government (pursuant to Section 42 of the Law). For this purpose, the Governor consults with the Public Committee for the Planning of Banknotes, Coins and Commemorative Coins, which reviews the various proposals and chooses those that will be presented to the Governor for approval.

Printing banknotes and minting coins - Banknotes are printed and coins are minted abroad, since the requirements of Israel's economy do not justify the establishment of a printing press or mint in Israel. The management of issuing currency involves planning the timing of supply in accordance with forecast demand and considerations of the cost of holding inventory and the expenses involved in each order.

Designing, planning, and issuing commemorative coins - As the sole issuer of legal tender in Israel, the Bank also issues commemorative coins each year and in honor of special events. The Governor determines the form, content, and other particulars of commemorative and special coins with the approval of the Administrative Council and the government (Section 43 of the Law), and with the assistance of the Public Committee for the Planning of Banknotes, Coins, and Commemorative Coins. Commemorative coins are generally made of gold or silver and are sold to collectors and the public in Israel and abroad through a marketing company selected by the Minister of Finance with the Governor's approval.  Commemorative coins are currently sold through the Israel Coins and Medals Corporation and the G.R.A.S. Design Company.

Cash management

Regulating and directive the cash system

Storage - When they arrive from abroad, banknotes and coins are stored in the Bank of Israel's vaults, requiring strict transport arrangements, rigorous security, and meticulous control.

Supply of cash - Cash is supplied to the public via cash centers operated by the commercial banks and the Postal Bank.  The cash centers fill demand and regulate surplus supply of banknotes and coins, ordering the required quantities from the Bank of Israel in accordance with supply and demand derived from deposits and withdrawals made by the public.

Overseeing the quality of currency in circulation - The Bank of Israel sets out rules for the banking corporations to maintain the quality of cash in circulation. According to these rules, banknotes and coins that the public deposits with the banks are carefully counted and authenticated, using sophisticated equipment purchased by the cash centers and approved by the Bank of Israel. The cash centers are required to deposit with the Bank of Israel banknotes and coins of low quality or that is suspected of being counterfeit. The Bank of Israel shreds these banknotes and sends degraded coins are to be melted down.

Other Currency Department activities include:

Public information and training - The Department engages in public information campaigns to provide information regarding the secure use of cash and the security measures integrated into banknotes.  It also conducts surveys to obtain information regarding the use of cash, and responds to thousands of enquiries (queries in writing and by phone) received from the public on matters related to currency.

Prevention of counterfeiting - The Department takes action to prevent counterfeiting, detect counterfeit banknotes, and remove them from circulation by studying the characteristics of counterfeits in the market, upgrading the security features that appear on the currency, enhancing the public's awareness of these features through advertising and instructional activities, and cooperating with the  Israel Police, the Association of Banks, the banks, and international organizations that are active in the war on counterfeiting.

Service to the public - The Currency Department exchanges coins for banknotes and replaces  degraded currency at the cash window located at the Bank of Israel headquarters in Jerusalem.  Cash window services are available by prearranged appointment, and are provided for limited amounts in accordance with relevant guidelines.