Israeli New Shekel

The new shekel is both Israel’s monetary unit and a lasting component of the economic stabilization undertaken in 1985.[3] Its English abbreviation is NIS, its Hebrew abbreviation is ש״ח, and its symbol is ₪.[6] One new shekel comprises 100 agorot, with the singular subdivision called an agora.[7] The currency replaced the earlier shekel rather than introducing the shekel name for the first time: the immediate predecessor had been used since 1980.[3]

The Bank of Israel has exclusive authority to issue the country’s banknotes and coins.[4] Its responsibilities include regulating and directing the currency system and ensuring a regular cash supply during both routine conditions and emergencies.[8] Banknotes are supplied in four denominations—NIS 20, 50, 100, and 200—according to demand communicated through the banking system.[8] The coin system includes both fractions of a shekel and denominations of several shekels.[4]

The currency’s design brings together practical and commemorative purposes: successive banknote series have incorporated anti-counterfeiting measures, aids for blind and vision-impaired users, and portraits of figures in Jewish history and Hebrew literature.[2][5][9] Coins likewise carry historical imagery, including the fruit-filled cornucopias and pomegranate on the two-shekel coin.[4] The retention of the name shekel followed the intention of the 1969 Shekel Law to preserve the currency’s ancient name.[2]

The modern currency’s name connects it to the biblical shekel, a unit of weight used for currency.[10] In the account in Genesis, Abraham weighs out 400 shekels of silver for Ephron’s field and the burial cave at Machpela.[10] The adoption of a Hebrew name for the modern state’s money followed decades of requests to replace the name of the Israeli pound.[3] A government decision in 1969 called for changing the currency’s name from the Israel lira to the shekel.[10]

Following the establishment of Israel, the Palestine pound remained legal tender until September 15, 1948, when it was replaced by the Israel pound.[11] From 1948 to 1954, Bank Leumi’s Issue Department issued banknotes for the state, while the government handled coin issuance.[11] Responsibility for issuing coins passed to the Bank of Israel under the 1954 Bank of Israel Law.[11] The lira remained in use until 1980, when it was replaced by the shekel at a rate of ten lira to one shekel.[12]

The change of name did not resolve the underlying problem of inflation.[3] The pound had undergone frequent devaluations against foreign currencies during the 1960s and 1970s, and the original shekel subsequently experienced hyperinflation in the first half of the 1980s.[3] Annual inflation rose from 133 percent in 1980 to 191 percent in 1983 and approximately 445 percent in 1984.[12] By the time of the stabilization effort, inflation was nearing 450 percent, with projections that it could reach 1,000 percent.[3]

The National Unity government formed in 1984, led in rotation by Yitzhak Shamir and Shimon Peres, implemented the 1985 Economic Stabilization Plan.[13] Adopted in July 1985, the program combined fiscal, monetary, exchange-rate, price, and wage measures rather than relying on a currency change alone.[7] It included an 18.8 percent devaluation, an exchange-rate arrangement permitting movement within a two-percent band, and extremely restrictive monetary policy.[7] Domestic prices were allowed to rise 17 percent before being frozen under stringent controls.[7]

The fiscal measures included a $750 million reduction in subsidies, increased taxes, and a $750 million budget cut.[7] The regular cost-of-living adjustment was suspended, initially reducing real wages by 20–30 percent; those losses had been recovered by March 1986.[7] Originally conceived as a short-term emergency measure, the stabilization program was extended several times.[7] The Knesset-approved plan also provided the setting for the introduction of the new currency.[3]

The new shekel entered circulation on September 4, 1985, at a rate of one new shekel for 1,000 old shekels.[2][4] Removing three zeros was intended to simplify cash transactions and processing through machines and computers.[2] Finance Minister Yitzhak Modai and Bank of Israel Governor Moshe Mandelbaum were decision-makers on the currency change, which Modai called “deleting zeros.”[14] The new coins entered circulation alongside the first series of new-shekel banknotes.[4]

At the transition, one U.S. dollar bought approximately one and a half new shekels, compared with 1,503 old shekels.[3] The old currency continued circulating after the new one appeared, producing confusion that the government addressed through a national information campaign using billboards, newspapers, and television.[3] The final transition, including the statement of prices in new shekels, was set for January 1, 1986.[6] Statistical descriptions consequently identify the new shekel and its division into 100 agorot as applying from January 1986.[1]

The stabilization period brought a sharp decline in inflation: the annual rate fell to approximately 20 percent in 1986.[7] A retrospective calculation put inflation for 1985 as a whole at 182.5 percent, but only 12.5 percent for its second half and seven percent for its final quarter.[14] Concern that inflation might return nevertheless remained strong enough for central-bank officials to prepare printing plates for a further, “newer” shekel.[14] The average exchange rate in 1988 was 1.6 new Israeli shekels to the U.S. dollar.[7]

The four banknote denominations in the third series are NIS 20, 50, 100, and 200, while the coin system includes half a shekel and 1-, 2-, 5-, and 10-shekel coins, together with agorot denominations.[4][5] The denomination list also includes a 10-agorot coin.[10] Smaller coins have been withdrawn: the one-agora coin ceased to be legal cash tender on April 1, 1991, and the five-agorot coin ceased to be legal tender on January 1, 2008.[4]

The original new-shekel coin issue combined continuity with redesigned imagery.[4] The three smallest denominations retained their predecessors’ obverse designs, while the two higher denominations received new designs; Gabi Neuman prepared the reverses in secrecy.[4] In 2006, plans for a two-shekel coin were confirmed, subject to final finance-minister approval, with the aim of easing cash transactions and lowering minting, production, and maintenance costs.[15] Its proposed imagery drew on an ancient Jewish coin showing a horn of plenty.[15] The coin entered circulation on December 9, 2007, with a pair of cornucopias filled with fruit and grain and a pomegranate between them.[4]

The first new-shekel banknotes commemorated figures in Jewish history, and their initial colors and designs resembled those of the preceding shekel series.[2] The five-, ten-, and fifty-shekel notes were issued on September 4, 1985; the hundred-shekel note followed on August 19, 1986, the twenty on April 12, 1988, and the two hundred on February 16, 1992.[2] Different colors were used for the 20-, 50-, 100-, and 200-shekel notes to help the public distinguish the denominations.[2] The first-series notes were canceled on July 1, 2000.[2]

The first-series NIS 200 note portrayed Israel’s third president, Zalman Shazar, alongside a menorah shaped like a DNA molecule, symbolizing scientific development.[2] Its background included Nathan Alterman’s 1949 poem “Compulsory Education Law,” while the reverse showed a girl bent over a desk against Hebrew printed letters.[2] A security thread, watermark, and raised geometric mark for blind users were among its features.[2]

The second banknote series entered circulation in 1999: the NIS 20 and NIS 100 notes appeared on January 3, followed by the NIS 50 and NIS 200 notes on October 31.[9] All measured 138 by 71 millimeters, used a vertical design, and shared design elements and security features.[9] They retained the same personages as the corresponding first-series denominations while adding improved anti-counterfeiting features.[9]

Banknote imagery from the currency’s earlier designs included Moshe Sharett before the unfurling of Israel’s flag at the United Nations building in 1949 on the NIS 20 note.[9] The NIS 100 note depicted Itzhak Ben-Zvi beside an excerpt from a speech at the first assembly of the Yemenite community.[9] Reverse-side subjects included the Jewish Brigade on the twenty-shekel note and an alley in Safed on the two-hundred-shekel note.[9] On April 13, 2008, polymer NIS 20 notes were issued for the first time, circulating alongside paper versions.[9] The plastic-type material offered greater durability and a longer service life.[9]

The cabinet approved the poet-centered banknote series in 2011, following selection of the figures by the Turkel committee and Bank of Israel Governor Stanley Fischer.[16] The allocation was Rachel to NIS 20, Shaul Tchernichovsky to NIS 50, Leah Goldberg to NIS 100, and Nathan Alterman to NIS 200; the order followed the poets’ dates of death, beginning with Rachel.[16] Designed by Osnat Eshel, the series incorporates anti-counterfeiting measures and features for blind and vision-impaired users.[5]

The first third-series note was the NIS 50, issued in September 2014 and featuring Tchernichovsky.[5] Its green design includes his portrait, a citrus tree, and microtext from “Oh, My Land, My Birthplace.”[5][17] A Corinthian-style column on the reverse reflects his interest in classical Greek works, while a line from “I Believe” reads, “For I shall still believe in both Man and his spirit, a fierce spirit”.[5] The microtext can be read with a magnifying glass.[17]

The NIS 200 note, issued in December 2015, is dedicated to Alterman.[5] Microtext from “Eternal Meeting” appears on the front; autumn leaves on the obverse and moonlit flora on the reverse draw inspiration from that poem, and the note also includes a verse from “Morning Song.”[5] The NIS 100 design honors Goldberg with almond blossoms and microtext from “In the Land of my Love the Almond Tree is Blooming” on the front.[5] Does and an excerpt from “White Days” appear on its reverse.[5]

The NIS 20 note presents Rachel against palm fronds, with microtext from “Kinneret.”[5] Its reverse depicts the Sea of Galilee landscape and includes a passage from “Perhaps it Never Happened...,” connecting the design to her writing and life around the lake, on whose shores she wished to be buried.[5] The red Rachel note and orange Goldberg note began distribution on November 23, 2017, through commercial banks, ATMs, and post office branches.[18] Second-series notes remained legal tender alongside the replacements during the gradual changeover.[18]

Accessibility measures developed alongside the visual designs and security systems.[5][17] Third-series notes use different colors and lengths to aid identification and include raised transparent-ink symbols that can be felt by touch.[17] Raised-ink lines near the bottom edges of the Rachel note help blind and vision-impaired users distinguish it.[5] Earlier measures included the first-series raised geometric mark.[2]

The new shekel made everyday transactions more manageable by replacing amounts expressed in thousands of old shekels with much smaller numerical sums.[2][3] Its introduction accompanied a broader stabilization policy that helped bring inflation under control, rather than constituting the entire anti-inflation program itself.[7] By 1987, the stabilization program had contributed to increased economic activity, while greater certainty was associated with stronger income and productivity growth.[7] Productivity increased cumulatively by ten percent between July 1985 and May 1988.[7]

Published accounts differ on the timing of full convertibility. CIE dates the new shekel’s freely convertible status to 2003, when its value became market-set, while Globes ties convertibility to Israel’s formal inclusion in the international clearing system on May 26, 2008.[3][6] Exchange-rate movements remained important to the domestic economy: during the two years preceding January 7, 2014, the rate moved from 3.82 shekels per U.S. dollar to 3.47, a decline of more than nine percent in the dollar’s value relative to the shekel.[19] These are historical figures for that period, not a current exchange quotation.[19]

The stronger shekel put pressure on exporters receiving foreign-currency revenue while paying their principal expenses in shekels.[19] Affected manufacturing sectors included electronics, pharmaceuticals, chemicals, metals, and food, while appreciation also made Israel more expensive for tourists.[19] Measures used to resist appreciation included Bank of Israel purchases of foreign currency in the local market, interest-rate reductions, and limits on the government’s dollar-shekel debt portfolio.[19] Concern that lower interest rates would contribute to rising housing prices slowed the response.[19] At the end of 2013, the Bank of Israel held more than $80 billion in foreign-currency reserves.[19]

The currency also provides a recurring public setting for Jewish history, Hebrew literature, and Israeli cultural achievement.[2][5] Its name preserves a connection to an ancient monetary and weight term, while coin designs draw on ancient Jewish imagery.[2][10][15] Banknote subjects extend from presidents and diplomatic milestones to poetry, education, and scientific development.[2][5][9] The third series gives particular prominence to Hebrew poetry by incorporating passages from the featured writers’ works directly into the notes’ imagery and microtext.[5]

The selection of poets for the third banknote series drew public and political criticism over representation.[16] Minister Silvan Shalom abstained from the 2011 cabinet vote, arguing that the notes included no Sephardic Jews and did not represent the whole nation.[16] Science and Technology Minister Daniel Hershkowitz also opposed the selection, saying that Hebrew culture was not limited to the four chosen poets.[16] Prime Minister Benjamin Netanyahu defended them as a recognized pantheon of modern Israeli poets and said future banknote cycles could include statesmen.[16]