Bank of Israel

The Bank of Israel (Hebrew: בנק ישראל, Arabic: بنك إسرائيل) is the central bank of Israel. The bank's headquarters is located in Kiryat HaMemshala in Jerusalem with a branch office in Tel Aviv. The current governor is Amir Yaron.[4]

Bank of Israel
בנק ישראל (Hebrew)
بنك إسرائيل (Arabic)
HeadquartersKiryat HaMemshala, Jerusalem, Israel
Established24 August 1954 (1954-08-24)
OwnershipGovernment of Israel (Ministry of Finance)[1]
GovernorAmir Yaron (2018-present)
Central bank of Israel
CurrencyIsraeli new shekel
ILS (ISO 4217)
ReservesUS$113.91 billion
(about 425.43 billion) (October 2018)[2]
Bank rate0.10% (March 2020)[3]
Preceded byBank Leumi Le-Israel
Websiteboi.org.il
Bank of Israel headquarters in Jerusalem, Israel.

The primary objective of the Bank of Israel is to maintain price stability and the stability of the financial system in Israel.[5][6] It also administers and implements monetary policy in Israel,[7] conducts foreign exchange operations, supervises and regulates the banking system,[8] takes care of the foreign reserves[9] and operations of the financial market infrastructure. The Bank of Israel has, under Article 41 and 44 of its Statute, the exclusive right to issue Israeli Shekel banknotes and coins.[10]

History

When Israel was granted independence in 1948, the power of note issuance was vested with the Anglo-Palestine Bank, which was refounded as Bank Leumi in 1950. Monetary policy and banking supervision remained controlled by the Ministry of Finance.

The Bank of Israel was founded on 24 August 1954, when the Knesset passed the Bank of Israel Law, which ceded the currency issuing and regulatory functions of the Ministry of Finance to the newly formed bank. Control over foreign currency exchange was not given to the bank until 1978. The bank was made completely independent in 1985 and since 1992, the bank manages its monetary policy so as to meet the inflation target set by the Israeli government - which is today a range of between 1 and 3 percent per annum, considered as price stability. Additionally, the bank manages the country's Foreign Exchange Reserves.

In 2010, the Bank of Israel was ranked first among central banks for its efficient functioning, according to IMD's World Competitiveness Yearbook.[11]

In March 2010, the Knesset approved a new Bank of Israel Law which took effect on 1 June 2010.[12] The new law defines the goals of the bank and gives the bank independence in determining its policy tools and the way of implementing them. The law changed the framework in which major decisions are made at the Bank of Israel. Decisions regarding the interest rate and monetary policy, in general, are made by a Monetary Committee, while the managerial decisions are approved by a Supervisory Council. This brings the Bank of Israel more in line with the decision making procedures of other financial institutions.

Governors

  • David Horowitz, 1954–1971
  • Moshe Sanbar, 1971–1976
  • Arnon Gafni, 1976–1981
  • Moshe Mendelbaum, 1982–1986
  • Michael Bruno, 1986–1991
  • Jacob A. Frenkel, 1991–2000
  • David Klein, 2000–2005
  • Stanley Fischer, 2005–2013
  • Karnit Flug, 2013–2018
  • Nadine Baudot-Trajtenberg, acting governor from 14 November 2018.[13]
  • Amir Yaron, 2018-, governor-designate as of October 2018[14]

See also

  • Israeli new shekel
  • Banking in Israel
  • Economy of Israel
  • List of banks in Israel
  • List of central banks

References

Further reading

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