Bank of Israel

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The Bank of Israel is the country’s central bank. Its main job is to keep prices stable and protect Israel’s financial system. It also manages monetary policy, conducts foreign exchange operations, supervises banks, maintains foreign reserves, and runs key parts of the financial market infrastructure. It has the exclusive right to issue Israeli banknotes and coins.

Headquarters are in Jerusalem (Kiryat HaMemshala) with a branch in Tel Aviv. The governor since 2018 is Amir Yaron. The bank uses the Israeli new shekel (ILS) and held foreign reserves around US$206 billion (about ₪664 billion) in March 2022. The policy rate was 4.5% in April 2023.

Key facts: the Bank of Israel was founded on 24 August 1954. It is owned by the Government of Israel (via the Ministry of Finance). It issues the currency and is responsible for stabilizing the economy and the financial system.

A brief history: before the bank existed, currency issues and money management were handled by other institutions. In 1954, the Bank of Israel Law moved currency issuing to the new bank. Foreign currency supervision moved to the bank in 1978, and full independence in 1985 helped the bank steer monetary policy more freely. In the early 1980s Israel faced very high inflation, peaking in 1984 at about 450%. The 1985 Economic Stabilization Plan (with a new shekel and strong fiscal measures) helped bring inflation down. Since then the bank has broadened its role in supervising banks and managing the currency.

In 1992 Israel set an inflation target of about 1–3% per year, aiming for price stability. The Bank of Israel Law was updated in 2010 to strengthen the bank’s independence and lay out how policy is made. A Monetary Committee now decides policy, while a Supervisory Council handles management.

Notable leaders over the years include David Horowitz, Michael Bruno, David Klein, Stanley Fischer, Karnit Flug, and, since 2018, Amir Yaron. Under Fischer, the bank took bold steps during the 2008 financial crisis, adjusting policy quickly and building foreign reserves.

The bank’s headquarters in Jerusalem were designed by Arieh Sharon and Eldar Sharon and opened in 1981; it was renovated between 2015 and 2018.

Today, the Bank of Israel remains the main institution responsible for Israel’s monetary policy, financial stability, and the overall health of the economy.