Currency Department - Annual Review 2009

All Press Releases In Subject:
Banknotes and Coins
Currency Department - Annual Review 2009
Letter of the Head of the Currency Department, submitted with the Department's Annual Report
For the full review in Hebrew - Click here
The amount of currency in circulation, reached about NIS 41.5 billion at the end of 2009, compared with about NIS 34.4 billion at the end of 2008, a 21 percent increase.
Cash in circulation grew even faster during the crisis that started towards the end of 2008, a trend observed also in many other countries. The public preferred to hold a larger amount of cash than in more normal times, rather than in interest-bearing deposits, mainly because of the very low level of interest. The increase in cash was also due to population growth and the greater incidence of cash transactions.
The share of NIS 200 banknotes in the total continued to increase (with a significant 33 percent jump in 2009), due to their broader distribution in cash dispensers. This increase accounted for 57 percent of the rise in the value of banknotes in circulation in 2009.
In 2009 banknotes constituted 97 percent of the total value of money in circulation, and coins, 3 percent. More than half of the coins in circulation (52 percent) were 10-agorot coins, used mainly for change on public transport within towns. The 1-sheqel coin, much used in parking meters and vending machines, accounted for 21 percent of the number of coins in circulation. The higher value coins, i.e., the 5-sheqel and 10-sheqel coins, constitute a relatively small share of the total number––only about 3 percent. The number of 2-sheqel coins, which was first issued in December 2007, increased by 54 percent in 2009, and constituted 2 percent of the number of coins in circulation.
A not insignificant share of coins in circulation is lost, so that actual coinage use is less than the recorded figures. This loss is quite natural, and it derives from the general attitude to coins as a low-value means of payment. The rate of loss of coins is inversely related to the value of the coin and its size, and is between 40 percent and 70 percent.
In 2009 the rising trend in the number of possibilities for withdrawing cash continued: the number of cash-dispensing bank ATMs (automated teller machines) rose by 2 percent, and other alternative possibilities were introduced, such as cash withdrawals in chain stores and petrol stations. In addition, other cash dispensers owned by private companies are operated by the businesses in which they are located.
In October 2009 the Bank of Israel's new policy regarding the operation of the cash system went into effect. The purposes of the new policy were to maintain a high quality of cash in circulation, reduce the costs of cash handling both to the Bank of Israel and to those whose businesses involve handling cash, and raise the level of service to the public. The new policy involved:
Ÿ Transferring most cash handling from the Bank of Israel to "Cash Centers" established by the large commercial banks.
Ÿ The introduction of a quantitative standard of quality. The standard sets a clear test that defines the difference between "fit" banknotes, intended for re-use, and "unfit" notes to be shredded by the Bank of Israel. The standard was determined in accordance with standards generally accepted world wide, and is based on general definitions for implementation and control by commercial banks’ staff, who deal with the public, and also on specific definitions for implementation and control by counting and sorting machines.
Ÿ The acquisition by the banks of new banknote counting and sorting machines, pursuant to the principles of the new policy, that enable the quality of banknotes to be measured, and counterfeits to be readily identified.
In 2009 the Currency Department acted to enhance its systems and streamline its work methods:
Ÿ The system for counting and sorting banknotes and coins was upgraded, with the purchase of state-of-the-art sophisticated machines. These will help the Department to improve its work methods and enhance the service it provides to its customers.
Ÿ A machine was purchased to pack coins returned to the banks and the public in rolls, instead of in nylon bags as at present. This will make coin packaging uniform, as new coins are received from the mints packed in rolls. This change will also save costs, storage area, and labor input, and will improve the convenience and safety in coin handling.
In 2009 the Currency Department continued planning a new series for Israel's currency, and made several decisions. The planning incorporates many aspects, including the design of the banknotes and coins, the material of the notes (the substrate, e.g., polymer or paper), and security features. It is planned to introduce the new series into circulation within three years.
The rate of counterfeits of banknotes and coins is low relative to those in the eurozone and the US. Most counterfeits are of the NIS 100 note and the NIS 10 coin. The rate of counterfeits in the latter increased in 2009.
In its struggle against counterfeit currency, the Currency Department acted in a special forum consisting of representatives of the police, the banks, and the Association of Banks, as well as representatives of the Department. The forum discusses and formulates means for preventing and identifying counterfeits and for dealing with them.
This report includes a detailed description of the security features incorporated in banknotes.
Recently many attempts have been made to use photocopies and replicas of banknotes in advertisements. We would like to bring to the attention of the public and to advertisers that there are limitations and prohibitions relating to photocopying banknotes and publishing such photocopies or photographs, to avoid suspicion of counterfeits.
From enquiries received in the Currency Department it is clear that the public is very involved and interested in matters related to cash. This is reflected in reactions received when new coins or banknotes are issued, in the constantly rising number of suggestions and enquiries about the currency, and in the public's awareness of details in the design of notes and coins.
The Currency Department provides a money-changing service (changing Israeli currency into larger or smaller denominations) at the cash desk in the Bank of Israel in Jerusalem. The public can also change at the cash desk, without charge, spoiled currency. Banknotes of the old (first) series of the New Israeli Sheqel which were withdrawn from circulation in 1999, and 5-agorot coins, which were withdrawn from circulation in 2008, can be exchanged into legal tender of the same value until December 31, 2010. The above can also be exchanged by sending them to the Bank of Israel, P.O. Box 780, 91007, Jerusalem, via registered mail, and the sender's bank account will be credited with the appropriate amount.
Banknotes of the first New Sheqel series and the 5-agorot coins can also be exchanged at branches of the commercial banks until December 31, 2010.
The cash desk in the Bank of Israel in Jerusalem is open:
Sunday to Thursday, 08:00 to 13:00, Tel: 02-6552846/7
Address for public enquiries relating to currency:
For information about Israel's banknotes and coins: click here.
Mordechai Fein
Head of Currency Department