Bank of Israel

Bank of Israel
Bank name	Bank of Israel
Image title	The main building in Jerusalem
Headquarters	Jerusalem, Israel
Established	24 August 1954
President	Amir Yaron
Leader title	Governor
Bank of	Israel
Currency	Israeli new shekel
Currency iso	ILS
Borrowing rate	4.75%
Reserves	US$ 204.5 billion (2023)
Website	https://www.boi.org.il

Bank of Israel. The Bank of Israel is the central bank of the State of Israel. Established by the Knesset in 1954, it is responsible for maintaining price stability, supporting other government economic policies, and managing the country's foreign exchange reserves. Its headquarters are located in the Kiryat Ben-Gurion district of Jerusalem, and it operates a secondary office in Tel Aviv.

History

The establishment was mandated by the Bank of Israel Law, 5714-1954, which was passed by the Knesset and signed by then-President Yitzhak Ben-Zvi. The bank began operations in December 1954, succeeding the Anglo-Palestine Bank, which had acted as a quasi-central bank during the British Mandate for Palestine and the early years of statehood. A major milestone was the Bank of Israel Law, 5770-2010, which modernized its mandate, granting it formal independence and enshrining price stability as its primary objective. Throughout its history, it has navigated numerous economic challenges, including periods of hyperinflation in the 1980s, various regional conflicts, and global financial crises like the 2007–2008 financial crisis.

Functions and objectives

Its primary objective, as defined by law, is to maintain price stability. Secondary objectives include supporting the government's general economic policy, particularly regarding growth and employment, and acting to ensure the stability of the financial system. Core functions include issuing the national currency, the Israeli new shekel, managing the country's substantial foreign exchange reserves, and serving as the banker to the government. It also regulates and supervises the banking system in Israel, promotes efficient payment systems, and provides economic research and statistics to the public and policymakers.

Organizational structure

The bank is headed by the Governor, who is appointed by the President of Israel on the recommendation of the government for a five-year term. The Governor is supported by a Senior Deputy Governor and several other deputy governors overseeing specific departments like Monetary, Financial, and Research. The Supervisory Council, chaired by the Governor, includes representatives from the public and government to oversee operations. Key operational units include the Monetary Department, the Foreign Exchange Activity Department, and the Banking Supervision Department.

Monetary policy

Monetary policy is set by the Monetary Committee, a six-member body established by the 2010 law, which includes the Governor, the Senior Deputy Governor, two other deputy governors, and two external members appointed by the Government of Israel. The committee's main tool is the central bank interest rate, which it sets to influence inflation and economic activity within an inflation target range set by the government in consultation with the Governor. The bank also utilizes open market operations, provides liquidity to the banking system, and may intervene in the foreign exchange market to smooth volatility, though such interventions are limited by policy.

Governors

The Governor serves as the chief executive and public face. The first Governor was David Horowitz, who served from 1954 to 1971. Notable subsequent governors include Moshe Sanbar during the Yom Kippur War economic turmoil, Michael Bruno who helped tame the hyperinflation of the 1980s, Jacob A. Frenkel who ushered in an era of globalization and independence, and Stanley Fischer, a former IMF official who guided the economy through the 2007–2008 financial crisis. The current Governor, appointed in 2018, is Amir Yaron, a former professor at the University of Pennsylvania.

See also

* Economy of Israel * Israeli new shekel * List of central banks * Monetary policy of Israel * Tel Aviv Stock Exchange

Category:Bank of Israel Category:Central banks Category:Economy of Israel Category:Organizations based in Jerusalem Category:1954 establishments in Israel