The Euro is launched



December 31, 1998

The Euro is Launched

The Foreign Currency Department of the Bank of Israel announces that in the wake of the introduction of the Euro in the countries of the EMU, as of 4 January the Bank of Israel will publish a representative exchange rate for the Euro. Concurrently, until the end of the year 2001, the Bank of Israel will continue to publish representative rates for the national currencies of the EMU members. These rates will be calculated on the basis of the conversion rates of the various currencies against the representative rate for the Euro. The Bank of Israel will cease to publish the representative exchange rate for the Ecu. The conversion rates between the Euro and the national currencies of the countries which have adopted it are as follows:

Currency
Deutschmark
Franc (Belgium, Luxembourg)
Dutch guilder
Italian lira
Spanish peseta
Portuguese escudo
French franc
Irish punt
Finnish markka
Austrian schilling
    
Conversion coefficient
1.95583
40.3399
2.20371
1936.27
166.386
200.482
6.55957
0.787564
5.94573
13.7603
Source: European Central Bank.

The Foreign Currency Department notes that there may be differences between the amount in NIS (New Israeli Shekels) calculated by converting the currencies of the EMU members via the representative rate of the Euro and the conversion coefficients, on the one hand, and the amount calculated by converting them via the representative rates the Bank of Israel publishes for them, on the other. This is because the latter are rounded to the fourth digit after the decimal point (see detailed explanation attached herewith, as published in our press release of September 15, 1998). Concurrently, the composition of the currencies included in the currency basket will be changed, with the Euro replacing the DM and the franc, as follows:

Currencies in basket before 1.1.99 Units of currency in basket Currencies in basket after 1.1.99 Units of currency in basket
 
Dollar 0.6741 Dollar 0.6741
DM 0.3588 Euro 0.22821
Sterling 0.0589 Sterling 0.0589
Franc 0.2933 Yen 6.5437
Yen 6.5437



1 The formula for the calculation is: 0.3588/1.95583 + 0.2933/6.55957 = 0.2282.

The Foreign Currency Department emphasizes that the changes in the composition of the currency basket are purely technical, and do not affect its value. This change is not connected with the routine adjustment made when necessary in the composition of the currency basket each year on April 30.

The Foreign Currency Department also stresses that the representative rates do not have any official status under law, and are not published in Reshumot. The Bank of Israel calculates the representative rates once a day and publishes them as a service to the public.