- Cash in circulation increased by 3 percent in 2016, compared with an increase of about 16 percent in 2015, to a value of about NIS 76 billion. It should be noted that until May 2017, the value of cash in circulation increased by 4.3 percent. Cash in circulation has increased by a yearly average of 11 percent in the past decade.
- In 2016, the public withdrew about NIS 230 billion in cash from the banks, a decline of 1 percent compared with 2015.
- Similar to previous years, the increase in the value of circulation of banknotes, is mainly reflected in the increase in the number of banknotes in the NIS 200 denomination, which accounted for 49 percent of banknote circulation at the end of 2016. By May 2017, 89 percent of the Series B NIS 50 banknotes in circulation had been replaced by banknotes from Series C (with the portrait of Shaul Tchernichovsky, which were launched in September 2014), and 65 percent of the Series B NIS 200 banknotes had been replaced with banknotes from Series C (with the portrait of Natan Alterman, which was launched in December 2015).
The Bank of Israel Currency Department operates on the basis of the authorities set out in the Bank of Israel Law concerning the issue of banknotes, coins and commemorative coins, and concerning the regulation of the cash system. There are three organizational branches within the Department—the Policy, Planning and Control Unit, the Issuance Division, and the Cash Management Division. The Department is responsible for the cash in Israel, from planning the quantity of cash in accordance with projected demand, through the design and issue of banknotes, coins and commemorative coins, including the security features embedded in them, to the operational regulation of the cash system.
The value of cash in circulation at the end of 2016 was NIS 76 billion, reflecting an increase of about 3 percent from the previous year, compared with an average annual increase of 11 percent over the past decade. Despite developments in alternative means of payment, the low growth rate in the value of cash in circulation can still not be attributed to those developments, since the increase in circulation in the first four months of 2017 is 4.3 percent. It seems that the low increase in 2016 is a correction of the growth rate in 2015, of 16 percent, which exceeded the average of the past decade, such that the average growth in the past two years is not much different than the average of previous years.
In 2016, the Bank of Israel Currency Department began conducting methodical surveys, which provide a significant tool in understanding cash use habits and trends. The findings of the surveys are detailed in depth in the Annual Report.
During the reviewed year, the Currency Department formulated the Bank of Israel Rules (Rules for the Proper Operation of the Currency System) with the aim of regulating various operational aspects of the currency system, including the operation of cash centers, mainly in order to maintain the quality of currency in circulation and to increase the efficiency of dealing with counterfeiting. These rules took effect in 2017.
The Department also initiated an emergency preparedness drill on a broad scale, which included the banking corporations, the Postal Company, messenger companies and other entities. The drill, which was notably successful, emphasized the continuity of the currency supply in various emergency scenarios.
In addition, the Currency Department continued to invest resources in upgrading the computerized infrastructure and information systems in order to improve and streamline the currency system. Among other things, the Currency Department reached the advanced stages of development of an analysis, tracking and control system based on the serial numbers of Series C New Shekel banknotes.
During the year, the process of replacing Series B banknotes with Series C banknotes continued. The Bank of Israel launched the new NIS 50 banknote in 2014, and by May 2017, about 89 percent of the banknotes in circulation had been replaced with banknotes from the new series. The new NIS 200 banknote was launched in 2015, and about 65 percent of the banknotes of this denomination have been replaced. The Bank of Israel will soon be launching the remaining denominations in the new series—the NIS 100 denomination and the NIS 20 denomination. The replacement of the series is intended to upgrade the security features in order to lower the risk of counterfeiting. The security features on the new banknotes are among the most advanced of their type, and are unique in that they are very easy for the public to identify yet very difficult to counterfeit.
Public awareness of the security features on the banknote is of particular importance during the launch of new banknotes, since counterfeiters will always try to take advantage of the public’s lack of familiarity with the banknote in order to distribute low-quality copied or counterfeit banknotes. Since this is a common phenomenon around the world, the Currency Department is acting to make the tools and means for recognizing the new banknote and its security features accessible to the public in advance. This is being done through a variety of means, including announcements and public information pamphlets in a variety of languages, a dedicated website at www.newbanknotes.org.il, the Bank of Israel website, and a telephone call center at 1-800-300-018.
Data on currency circulation:
Table 1: Currency in Circulation, year-end | ||||||||
Components of circulation (NIS billion) |
Rate of increase (percent) | |||||||
Year |
|
Banknotes |
Coins |
Total Circulation |
|
Banknotes |
Coins |
Total Circulation |
2007 |
27.8 |
1.2 |
29.0 |
14 |
7 |
13 | ||
2008 |
33.1 |
1.3 |
34.4 |
19 |
6 |
19 | ||
2009 |
40.1 |
1.4 |
41.5 |
21 |
7 |
21 | ||
2010 |
43.4 |
1.5 |
44.8 |
8 |
7 |
8 | ||
2011 |
47.4 |
1.6 |
49.0 |
9 |
6 |
9 | ||
2012 |
53.1 |
1.7 |
54.8 |
12 |
6 |
12 | ||
2013 |
55.7 |
1.8 |
57.5 |
5 |
9 |
5 | ||
2014 |
61.3 |
1.9 |
63.2 |
10 |
7 |
10 | ||
2015 |
71.4 |
2.1 |
73.5 |
17 |
8 |
16 | ||
2016 |
|
73.8 |
2.2 |
76.0 |
|
3 |
6 |
3 |
SOURCE: Currency Department. |
||||||||
Table 2: Number of Banknotes by Denomination, 2009–16 (year-end, millions of banknotes) | ||||||||||
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
Rate of change in 2016 (percent) | ||
NIS 20 |
32 |
35 |
34 |
35 |
36 |
36 |
37 |
40 |
6 | |
NIS 50 |
51 |
48 |
46 |
51 |
51 |
54 |
60 |
61 |
2 | |
NIS 100 |
154 |
145 |
141 |
146 |
147 |
152 |
165 |
169 |
2 | |
NIS 200 |
107 |
129 |
152 |
176 |
189 |
213 |
256 |
266 |
4 | |
Total |
|
344 |
357 |
373 |
408 |
423 |
455 |
518 |
534 |
3 |
SOURCE: Currency Department. |
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The new series of banknotes