Currency Department Annual Report for 2004

4.7.2005
 
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.