The Currency Department’s Annual Report for 2015
Currency circulation in Israel totaled NIS 73 billion at the end of 2015, compared with NIS 63 billion at the end of 2014—an increase of 16 percent, against the background of the decline in interest rates in 2015.
· Currency circulation in Israel totaled NIS 73 billion at the end of 2015, compared with NIS 63 billion at the end of 2014—an increase of 16 percent, against the background of the decline in interest rates in 2015.
· Similar to previous years, the increase in the value of banknote circulation in 2015 is explained mainly by an increase in the number of NIS 200 banknotes in circulation. In 2015, a large proportion of these banknotes were due to banknotes from the new series being put into circulation in December once the banking system had been provided with an inventory of new banknotes prior to launch. The NIS 200 banknotes account for 48 percent of all banknotes in circulation.
· In 2015, withdrawals from the banks by the public totaled NIS 231 billion, an increase of 2 percent compared with 2014. The figures show that for the first time in a decade, there was a decline of 2 percent in the value of withdrawals from tellers. In parallel, there was an increase of 10 percent in the value of withdrawals from ATM machines belonging to the banking corporations.
· The figures for September 2016 show that the rate of replacement of the NIS 50 banknote (which was launched in September 2014) is 86 percent, and the rate of replacement in the circulation of the NIS 200 banknote (which was launched in December 2015) is 36 percent. According to the plan, the replacement of the NIS 200 banknotes in circulation will be completed by the time the NIS 20 and NIS 100 denominations are launched, which is planned to take place by the end of 2017.
The Bank of Israel Currency Department operates under the authorities set out in the Bank of Israel Law, and is the only entity authorized to issue banknotes, coins and commemorative coins and to regulate the currency system in Israel.
The Currency Department includes the Issue Division, the Cash Management Division and the Policy, Planning and Control Unit. 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, to the regulation of the cash system.
The value of cash circulation at the end of 2015 was NIS 73 billion, an increase of about 16 percent compared to the figure for the previous year. This was due to the decline in the interest rate and the entry into circulation of banknotes from the new series in December. The value of circulation in Israel increased in recent years by an average of about 10 percent per annum. Notably, despite the development of advanced electronic means of payment and government decisions on minimizing the use of cash as part of the struggle against the unreported economy, the volume of cash did not decline, but rather increased, similar to the situation in other countries.
The Currency Department is responsible for supplying cash in accordance with demand both during routine times and emergencies. Alongside the supply of cash in accordance with demand, the Department acts to protect the currency from counterfeits, and to maintain adequate quality of the cash in circulation. This activity includes the processing, counting and sorting of hundreds of millions of banknotes and coins using advanced technologies, storing them in vaults for routine and contingency needs, and distributing them to the banking system for use by the public.
The Department is responsible for the integration of advanced security features into the banknotes, formulating criteria for the quality control of cash, providing training for banking corporations’ cash centers and supervising them, and counterfeit prevention activities in conjunction with the Israel Police and other parties.
In recent years, the Currency Department has been leading the project to replace the series of banknotes, the main purpose of which is to improve 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 kind, very easy for the public to identify, and very difficult to counterfeit. The banknotes of the new series and the security features they contain have won prizes and recognition at international professional currency competitions.
In 2015, the new NIS 200 banknote—the second in the new series of banknotes—was launched. It is blue, and bears a portrait of the poet Natan Alterman. The banknote’s final design was approved by the Public Committee for the Planning of Banknotes, Coins and Commemorative Coins under the chairmanship of retired Supreme Court Justice, the Hon. Jacob Turkel, as well as the Governor of the Bank of Israel, the Supervisory Council, and the Government of Israel. The launch was preceded by a long series of preliminary activities regarding both the issuance and public information and advanced operational preparations, including the planning and design of the banknote and its security measures, the production of the banknote, meticulous quality control, and public information and operational preparations both at the Bank of Israel and in the market as a whole. Due to the thorough advanced preparations on the operational level, the entry of the new NIS 200 banknote into circulation was successful and without mishap, quite like the successful launch of the NIS 50 banknote in 2014. The Currency Department is continuing to advance the project of the new series of banknotes, and is preparing for the launch of the NIS 100 and NIS 20 banknotes.
By the end of 2015, about 80 percent of the NIS 50 Series B banknotes had been replaced with Series C banknotes. The replacement of the NIS 200 Series B banknotes is also being done in a gradual and controlled manner to provide the public with a sufficient acclimation period. This process involves a total quantity of about 250 million banknotes (about half of all banknotes in circulation).
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 acquaintance 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 public information booklets in a variety of languages, on the newbanknotes.org.il website, and on the “New Banknotes” cellular app.
This report includes a wide range of detailed information on the Department’s activity during the past year. Further information is available on the Bank of Israel’s website at www.boi.org.il/en/currency.