The Bank formulated its targets for the coming three years, and they will guide its activities during that period.

The Bank of Israel’s budget for 2017 is 2.5 percent lower than the budget for 2016.

The Bank of Israel today is publishing the main provisions of its work plan and administrative activity budget for 2017.


The Bank of Israel’s Supervisory Council[1] discussed the Bank's annual work plan, approved the Bank's annual budget for administrative activities, and submitted the budget to the Knesset Finance Committee, as required by the Bank of Israel Law, 5770–2010. The budget was constructed with the goal of allowing the Bank to carry out its functions and to achieve its primary targets for the year.


The Bank of Israel recently completed a strategic process of defining the Bank’s targets for the next three years. These targets serve as the basis of the work plan and budget for 2017, and were formulated while taking into account the changes and challenges expected in the Israeli and global economies during this period.


Following are the primary targets that the Bank’s management set for the Bank’s work and for the benefit of the public and the economy for the coming years:


1.      Maintaining price stability

The challenge inherent in managing monetary policy in a low interest rate environment requires the Bank of Israel to make informed use of monetary tools that are appropriate to this interest rate environment. At the same time, expectations for a global economic recovery require the Bank to prepare for a renormalization of monetary policy in the slightly longer term. To that end, the Bank of Israel will continue to align the macroeconomic projection abilities with conditions created after the crisis and to take into account considerations related to financial stability when formulating monetary policy.


2.      Strengthening the financial system’s stability and resilience to crises

An economy’s economic and financial resilience is reflected in, among other things, its ability to deal with crises and to get through them in an optimal manner, as was proven in the last crisis. In order to bolster the financial system’s readiness to deal with various crisis events, the Bank will act through various routes—promoting risk-based banking supervision of the system’s stability, advancing oversight and regulation of payment and settlement systems and of payment services, establishing a Financial Stability Committee to coordinate among various financial supervision authorities, initiating deposit insurance and tools for handling banks encountering difficulties.


3.      Promoting effective and reliable systems and means of payment

Among its other functions, the Bank of Israel is responsible for the regular supply of cash to the economy, and ensuring that there are payment systems and means of payment that serve as cash substitutes, such as checks, the Zahav (RTGS) system, the Shva and Masav (automated clearing house) systems, various payment cards, and other advanced means of payment. The Bank of Israel works to ensure the effectiveness and reliability of the various means of payment in the economy. In the coming years, the Bank of Israel will move forward with the issue of the next denominations—NIS 100 and NIS 20—in the new series of banknotes, which are expected to enter circulation by the end of 2017. In addition, the Bank will deal with increasing the use of advanced systems and means of payment, in advancing the infrastructure for fast and secure clearing of advanced retail payments, and maintaining the public’s confidence in currency via public awareness campaigns and prevention of counterfeiting.


4.      Increasing competition and efficiency in the financial system

Banking system competition is of great value to the public and the economy, as it acts to reduce the prices of banking services, to improve their quality, and to expand their accessibility to the general public. Technological innovations allow the progress of banking system competition, as they make it easier for nonbank entities to enter various sectors of the credit market—direct provision of credit, establishment of communication systems between borrowers and lenders, and the setting up of systems that make it possible to compare prices, to analyze customers’ needs, etc. Accordingly, the Bank of Israel will act in the coming years to bolster competition in retail credit areas, credit to small businesses, and payment and settlement systems, by supporting structural and technological changes and consumer-oriented steps for the benefit of the general public, in setting up a national credit data register, expanding access to payment and settlement systems to entities that are not banking corporations, formulating risk-adjusted regulation for merchant acquirers, nonbank entities and new banks, opening the payment system infrastructure to competition and improving its efficiency, and promoting technology and innovation in banking and finance.


5.      Protecting banking system customers

The Bank of Israel is responsible for protecting banking system customers and for ensuring that the banks relate to them fairly. The Bank’s activities in this area contribute to strengthening the public’s confidence in the banking system as well as bolstering its confidence in the Bank of Israel as the entity that is responsible for regulating such activity. In the coming years, the Bank of Israel will work to maintain a tight connection between the Banking Supervision Department and representatives of the public and social organizations, and to promote financial-banking awareness among various target population groups. In addition, the Bank will act to strengthen its system of public enquiries services vis-à-vis banking system customers. In this regard, it should be noted that the Bank of Israel initiated a project in 2016 to increase accessibility to the public through an innovative website that will allow the public to receive information services and to produce digital authorizations.


6.      Supporting sustainable and inclusive growth

Expected demographic developments, and with them the exhausting of processes that accelerated growth in previous decades, indicate that the growth in GDP per capita could decline markedly as early as in the remainder of this decade. In order to assist in designing a policy path and processes that will contribute to increasing the potential growth of the economy, and alongside that reduce inequality and poverty, the Bank of Israel will focus its research in coming years on areas with the potential to contribute to increasing growth and distributing its benefits to various segments of the population. Accordingly, the Bank will act to develop recommendations for economic policy that will contribute to growth of Israel’s economy through increasing productivity, developing physical infrastructures and human capital and increasing the efficiency of using them. Likewise, the Bank will promote the carrying out of research in welfare and employment, with the goal of creating the infrastructure for recommendations on policy measures that will increase revenues and employment for all segments of the population.


7.      Promoting economic research and statistical information

A central bank’s activity and decision-making rely on extensive research and statistical data. The Bank therefore works to reduce the gaps in research and statistical data and develops new approaches to collecting and processing data. The Bank acts to integrate the areas of research, knowledge, and tools that expand the range of possible recommendations with regard to policy; to develop knowledge and expertise in advanced statistical methods and tools; and to implement these abilities in order to extract data, formulate new insights, and to forecast developments in Israel’s economy and financial system. In addition, the Bank strives to expand the public’s and economic researchers’ access to statistical data, to expand the statistical data in new areas in accordance with the economy’s development and to promote economic research, on areas of Israel’s economy, at international standards.


8.      Managing the foreign exchange reserves

The Bank of Israel manages the State’s foreign exchange reserves in accordance with a market risk profile defined in guidelines outlined by the Monetary Committee. The profile takes into account the level of reserves, the plan to purchase foreign currency intended to moderate the effect of natural gas production on the current account, and the goals of holding the reserves. The asset allocation of the reserves portfolio is set so that it has an adequate expected return within the framework of the desired level of market risk, credit risk, and liquidity risk, and within the framework of the limitations incorporated in the guidelines. In 2017, the Bank of Israel will continue to examine the expansion of the range of markets and assets in which it invests the foreign exchange reserves.


In addition to these multiyear targets for the good of the Israeli public and economy, the Bank of Israel set several targets to ensure it is an advanced, dynamic, and effective central bank that merits the confidence of the public.


·         Bolstering the organizational preparedness for achieving the Bank’s targets

The Bank of Israel acts to bolster its operational preparedness and organizational effectiveness in order to increase its efficiency and to lead to an optimal allocation of resources over time. Organizational preparedness includes integrating innovative technologies at the Bank, strengthening functional continuity and protecting the Bank of Israel’s cyber dimension in crisis situations, upgrading the Bank’s physical infrastructures and bringing them in line with changing needs and the enhancement of the risk management system at the Bank.


·         Development of human capital

In order to maintain the high level of professionalism that has characterized the Bank of Israel over the years, the Bank will emphasize processes that ensure the hiring and retaining of a quality workforce with a range of talents, the formulation and implementation of new tools to cultivate human capital, and the tightening of cooperation and coordination with regulators in Israel and abroad and with other central banks.


·         Enhancing the management of information and knowledge at the Bank

The high level of Bank of Israel employees’ professionalism that has been maintained over the years is based on information, knowledge and experience that employees accumulated over time. Therefore, the Bank will continue to invest efforts in developing tools, methodologies, systems and procedures that will allow the efficient retention and improvement of data and information accumulated at the Bank. Accordingly, the Bank will promote the establishment of an intra-organizational communication and information-sharing system, including an appropriate technological infrastructure, and the institutionalizing and promoting of an integrative infrastructure for the management and full use of the Bank’s databases.


·         Maintaining and strengthening the public’s confidence in the Bank of Israel

The public’s confidence is one the main assets of a central bank. This confidence is based to a large extent on how the media presents and explains the organization, and its reputation among the public. That reputation is based on the organization’s professionalism, credibility and integrity, and in these areas the Bank of Israel is considered a leader in the public sector. There is considerable importance in maintaining and enhancing the public’s trust in the Bank of Israel, as it improves the Bank’s ability to carry out its functions and to attain its objectives set in law, for the good of the economy and the public. Accordingly, the Bank will take care in the coming years to expand and increase the effectiveness of the publicity of the Bank of Israel’s policies and actions to various target populations.



The Bank’s Budget


The Bank of Israel's budget relates to the Bank’s administrative activities necessary for performing its functions and achieving its targets.


In accordance with the Bank of Israel Law, the Bank of Israel's budget is divided into several areas of activity:


1.      Management and Central Services (the expenditure budgets of the entities that deal with the management of the Bank and with the provision of services and support)

2.      Performance of the Bank’s functions (the expenditure budgets of the departments that carry out the Bank’s functions)

3.      Representative office abroad

4.      Pensions

5.      Investments

6.      Income

7.      Reserve

8.      Currency issue

9.      Operation of the Citizens of Israel Fund for natural gas profits

10.  Central credit register


The Bank of Israel’s overall budget for 2017 totals NIS 1,074 million, which is 2.5 percent lower, on a nominal basis, than the 2016 budget (NIS 1,101 million).


Following are the main changes in the Bank of Israel budget for 2017:


Investments: A decrease of NIS 31.9 million (-23.9 percent) deriving mainly from changes in the expected payment schedule related to the project of renovating the main building in Jerusalem and the process of setting up a Technology and Emergency Center, projects that were approved in previous years.


Currency issue: A decrease of NIS 17.5 million (-7.5 percent), deriving mainly from the expected end of the issuance of the new banknote series around the end of 2017, with the entry into circulation of the new NIS 100 and NIS 20 denominations.


Pensions: A decrease of NIS 13.7 million (-4.7 percent), deriving mainly from the end of retroactive payments that were paid in 2014–16 in respect of the agreement to index pension allowances to the Consumer Price Index instead of to the average wage, similar to the agreement that had been signed by the government in the past.


Central credit register: An increase of NIS 11.2 million (+55.8 percent), deriving from the Bank’s activities to implement the Credit Data Law, 5776-2016, which authorizes the Bank of Israel to set up and operate a central credit register and to appoint the staff and officials necessary for it. The budget includes the range of activities for implementing the law, including establishing the Register, setting up the system for the Supervisor of Credit Data Sharing, appointing a Supervisor of Privacy Protection, setting the Register Manager’s system, and appointing a Committee that will advise the Supervisor of Credit Data Sharing on issuing directives to various entities that will use the Register.  


Budget for future years: Of the budget for permitted commitments for coming years, 33.9 percent is designated for future investment commitments by the Bank, mainly for the renewal of infrastructures and the planned renovation at the Bank’s main building in Jerusalem and for setting up the Technology and Emergency Center. An additional 29.6 percent of the budget for permitted commitments for coming years derives from the area of currency issue, and 14.6 of the budget for permitted commitments for coming years is designated for implementing the Credit Data Law, 5776-2016.


The Bank of Israel’s base budget, which includes expenditure for labor, investments, and current expenditures is NIS 820.6 million, compared with NIS 842.6 million in 2016, a decrease of 2.6 percent. This decrease reflects stability and increased efficiency in the base budget over time, in light of the increase in the Bank’s activities in recent years.


The administrative activities budget does not include income and expenses stemming from the implementation of monetary tools, the provision of credit to banking corporations and to other financial institutions, activities related to managing liquidity in the economy, and foreign exchange reserves investments. Such income and expenses are reflected in the Bank of Israel's financial statements.



Table 1: The Bank of Israel’s Budget for 2017

(financial data in NIS thousand)







Permitted commitments for coming years

Personnel ceiling

Original 2016 budget

Actual expenditure 2015


Bank of Israel







Management and Central Services







Performance of Bank’s functions







Representative office abroad



































Currency issue







Operation of the Citizens of Israel Fund for natural gas profits







Central credit register







[1] The Supervisory Council is the entity charged with supervising the administrative activities of the Bank of Israel. The Supervisory Council consists mostly of members from among the public. The Supervisory Council members from among the public are Chairman Mr. Uri Galili; Mr. Ytzhak Edelman, CPA, and Prof. Nina Zaltzman. The internal members of the Council are Governor of the Bank of Israel Dr. Karnit Flug and Deputy Governor of the Bank of Israel Dr. Nadine Baudot-Trajtenberg.