To plan (Hebrew)​​

Bank formulated its targets for the coming three years, and they will guide its
activities during that period.

Bank of Israel’s budget for 2017 is 2.5 percent lower than the budget for 2016.

The Bank of Israel today is publishing the
main provisions of its work plan and administrative activity budget for 2017.


The Bank of Israel’s Supervisory
discussed the Bank’s annual work plan, approved the Bank’s annual budget for
administrative activities, and submitted the budget to the Knesset Finance
Committee, as required by the Bank of Israel Law, 5770–2010. The budget was
constructed with the goal of allowing the Bank to carry out its functions and to
achieve its primary targets for the year.


The Bank of Israel recently completed a
strategic process of defining the Bank’s targets for the next three years.
These targets serve as the basis of the work plan and budget for 2017, and were
formulated while taking into account the changes and challenges expected in the
Israeli and global economies during this period.


Following are the primary targets that the
Bank’s management set for the Bank’s work and for the benefit of the public and
the economy for the coming years:


1.      Maintaining price stability

The challenge inherent in managing
monetary policy in a low interest rate environment requires the Bank of Israel
to make informed use of monetary tools that are appropriate to this interest
rate environment. At the same time, expectations for a global economic recovery
require the Bank to prepare for a renormalization of monetary policy in the
slightly longer term. To that end, the Bank of Israel will continue to align
the macroeconomic projection abilities with conditions created after the crisis
and to take into account considerations related to financial stability when
formulating monetary policy.


2.      Strengthening the financial system’s stability and resilience
to crises

An economy’s economic and financial resilience
is reflected in, among other things, its ability to deal with crises and to get
through them in an optimal manner, as was proven in the last crisis. In order
to bolster the financial system’s readiness to deal with various crisis events,
the Bank will act through various routes—promoting risk-based banking supervision
of the system’s stability, advancing oversight and regulation of payment and
settlement systems and of payment services, establishing a Financial Stability
Committee to coordinate among various financial supervision authorities,
initiating deposit insurance and tools for handling banks encountering


3.      Promoting effective and reliable systems and means of payment

Among its other functions, the Bank of
Israel is responsible for the regular supply of cash to the economy, and
ensuring that there are payment systems and means of payment that serve as cash
substitutes, such as checks, the Zahav (RTGS) system, the Shva and Masav (automated
clearing house) systems, various payment cards, and other advanced means of
payment. The Bank of Israel works to ensure the effectiveness and reliability
of the various means of payment in the economy. In the coming years, the Bank
of Israel will move forward with the issue of the next denominations—NIS 100
and NIS 20—in the new series of banknotes, which are expected to enter
circulation by the end of 2017. In addition, the Bank will deal with increasing
the use of advanced systems and means of payment, in advancing the
infrastructure for fast and secure clearing of advanced retail payments, and maintaining
the public’s confidence in currency via public awareness campaigns and
prevention of counterfeiting.


4.      Increasing competition and efficiency in the financial system

Banking system competition is of great
value to the public and the economy, as it acts to reduce the prices of banking
services, to improve their quality, and to expand their accessibility to the
general public. Technological innovations allow the progress of banking system
competition, as they make it easier for nonbank entities to enter various
sectors of the credit market—direct provision of credit, establishment of
communication systems between borrowers and lenders, and the setting up of
systems that make it possible to compare prices, to analyze customers’ needs,
etc. Accordingly, the Bank of Israel will act in the coming years to bolster
competition in retail credit areas, credit to small businesses, and payment and
settlement systems, by supporting structural and technological changes and
consumer-oriented steps for the benefit of the general public, in setting up a
national credit data register, expanding access to payment and settlement
systems to entities that are not banking corporations, formulating
risk-adjusted regulation for merchant acquirers, nonbank entities and new banks,
opening the payment system infrastructure to competition and improving its
efficiency, and promoting technology and innovation in banking and finance.


5.      Protecting banking system customers

The Bank of Israel is responsible for
protecting banking system customers and for ensuring that the banks relate to
them fairly. The Bank’s activities in this area contribute to strengthening the
public’s confidence in the banking system as well as bolstering its confidence
in the Bank of Israel as the entity that is responsible for regulating such
activity. In the coming years, the Bank of Israel will work to maintain a tight
connection between the Banking Supervision Department and representatives of
the public and social organizations, and to promote financial-banking awareness
among various target population groups. In addition, the Bank will act to
strengthen its system of public enquiries services vis-à-vis banking system
customers. In this regard, it should be noted that the Bank of Israel initiated
a project in 2016 to increase accessibility to the public through an innovative
website that will allow the public to receive information services and to produce
digital authorizations.


6.      Supporting sustainable and inclusive growth

Expected demographic developments, and
with them the exhausting of processes that accelerated growth in previous
decades, indicate that the growth in GDP per capita could decline markedly as
early as in the remainder of this decade. In order to assist in designing a
policy path and processes that will contribute to increasing the potential growth
of the economy, and alongside that reduce inequality and poverty, the Bank of
Israel will focus its research in coming years on areas with the potential to
contribute to increasing growth and distributing its benefits to various
segments of the population. Accordingly, the Bank will act to develop
recommendations for economic policy that will contribute to growth of Israel’s
economy through increasing productivity, developing physical infrastructures
and human capital and increasing the efficiency of using them. Likewise, the
Bank will promote the carrying out of research in welfare and employment, with
the goal of creating the infrastructure for recommendations on policy measures
that will increase revenues and employment for all segments of the population.


7.      Promoting economic research and statistical information

A central bank’s activity and
decision-making rely on extensive research and statistical data. The Bank therefore
works to reduce the gaps in research and statistical data and develops new
approaches to collecting and processing data. The Bank acts to integrate the
areas of research, knowledge, and tools that expand the range of possible
recommendations with regard to policy; to develop knowledge and expertise in
advanced statistical methods and tools; and to implement these abilities in
order to extract data, formulate new insights, and to forecast developments in
Israel’s economy and financial system. In addition, the Bank strives to expand
the public’s and economic researchers’ access to statistical data, to expand
the statistical data in new areas in accordance with the economy’s development
and to promote economic research, on areas of Israel’s economy, at
international standards.


8.      Managing the foreign exchange reserves

The Bank of Israel manages the State’s
foreign exchange reserves in accordance with a market risk profile defined in
guidelines outlined by the Monetary Committee. The profile takes into account
the level of reserves, the plan to purchase foreign currency intended to
moderate the effect of natural gas production on the current account, and the
goals of holding the reserves. The asset allocation of the reserves portfolio
is set so that it has an adequate expected return within the framework of the
desired level of market risk, credit risk, and liquidity risk, and within the
framework of the limitations incorporated in the guidelines. In 2017, the Bank
of Israel will continue to examine the expansion of the range of markets and
assets in which it invests the foreign exchange reserves.


In addition to these multiyear
targets for the good of the Israeli public and economy, the Bank of Israel set
several targets to ensure it is an advanced, dynamic, and effective central
bank that merits the confidence of the public.


Bolstering the
organizational preparedness for achieving the Bank’s targets

The Bank of Israel acts to bolster its
operational preparedness and organizational effectiveness in order to increase
its efficiency and to lead to an optimal allocation of resources over time.
Organizational preparedness includes integrating innovative technologies at the
Bank, strengthening functional continuity and protecting the Bank of Israel’s
cyber dimension in crisis situations, upgrading the Bank’s physical
infrastructures and bringing them in line with changing needs and the
enhancement of the risk management system at the Bank.


Development of human

In order to maintain the high level of professionalism
that has characterized the Bank of Israel over the years, the Bank will
emphasize processes that ensure the hiring and retaining of a quality workforce
with a range of talents, the formulation and implementation of new tools to
cultivate human capital, and the tightening of cooperation and coordination
with regulators in Israel and abroad and with other central banks.


Enhancing the management
of information and knowledge at the Bank

The high level of Bank of Israel
employees’ professionalism that has been maintained over the years is based on
information, knowledge and experience that employees accumulated over time.
Therefore, the Bank will continue to invest efforts in developing tools,
methodologies, systems and procedures that will allow the efficient retention
and improvement of data and information accumulated at the Bank. Accordingly,
the Bank will promote the establishment of an intra-organizational
communication and information-sharing system, including an appropriate
technological infrastructure, and the institutionalizing and promoting of an
integrative infrastructure for the management and full use of the Bank’s


Maintaining and
strengthening the public’s confidence in the Bank of Israel

The public’s confidence is one the main
assets of a central bank. This confidence is based to a large extent on how the
media presents and explains the organization, and its reputation among the
public. That reputation is based on the organization’s professionalism, credibility
and integrity, and in these areas the Bank of Israel is considered a leader in
the public sector. There is considerable importance in maintaining and
enhancing the public’s trust in the Bank of Israel, as it improves the Bank’s
ability to carry out its functions and to attain its objectives set in law, for
the good of the economy and the public. Accordingly, the Bank will take care in
the coming years to expand and increase the effectiveness of the publicity of
the Bank of Israel’s policies and actions to various target populations.



The Bank’s Budget


The Bank of Israel’s budget relates to the
Bank’s administrative activities necessary for performing its functions and
achieving its targets.


In accordance with the Bank of Israel
Law, the Bank of Israel’s budget is divided into several areas of activity:


Management and Central
Services (the expenditure budgets of the entities that deal with the management
of the Bank and with the provision of services and support)

Performance of the Bank’s
functions (the expenditure budgets of the departments that carry out the Bank’s

Representative office





Currency issue

Operation of the Citizens
of Israel Fund for natural gas profits

Central credit register


The Bank of Israel’s overall budget for
2017 totals NIS 1,074 million, which is 2.5 percent lower, on a nominal basis,
than the 2016 budget (NIS 1,101 million).


Following are the main changes in the
Bank of Israel budget for 2017:


Investments: A decrease of NIS
31.9 million (-23.9 percent) deriving mainly from changes in the expected
payment schedule related to the project of renovating the main building in
Jerusalem and the process of setting up a Technology and Emergency Center, projects
that were approved in previous years.


Currency issue: A decrease of
NIS 17.5 million (-7.5 percent), deriving mainly from the expected end of the
issuance of the new banknote series around the end of 2017, with the entry into
circulation of the new NIS 100 and NIS 20 denominations.


Pensions: A decrease of NIS 13.7
million (-4.7 percent), deriving mainly from the end of retroactive payments that
were paid in 2014–16 in respect of the agreement to index pension allowances to
the Consumer Price Index instead of to the average wage, similar to the
agreement that had been signed by the government in the past.


Central credit register: An
increase of NIS 11.2 million (+55.8 percent), deriving from the Bank’s
activities to implement the Credit Data Law, 5776-2016, which authorizes the
Bank of Israel to set up and operate a central credit register and to appoint
the staff and officials necessary for it. The budget includes the range of
activities for implementing the law, including establishing the Register,
setting up the system for the Supervisor of Credit Data Sharing, appointing a
Supervisor of Privacy Protection, setting the Register Manager’s system, and
appointing a Committee that will advise the Supervisor of Credit Data Sharing
on issuing directives to various entities that will use the Register.  


Budget for future years: Of the
budget for permitted commitments for coming years, 33.9 percent is designated
for future investment commitments by the Bank, mainly for the renewal of
infrastructures and the planned renovation at the Bank’s main building in
Jerusalem and for setting up the Technology and Emergency Center. An additional
29.6 percent of the budget for permitted commitments for coming years derives
from the area of currency issue, and 14.6 of the budget for permitted
commitments for coming years is designated for implementing the Credit Data
Law, 5776-2016.


The Bank of Israel’s base budget, which
includes expenditure for labor, investments, and current expenditures is NIS
820.6 million, compared with NIS 842.6 million in 2016, a decrease of 2.6
percent. This decrease reflects stability and increased efficiency in the base budget
over time, in light of the increase in the Bank’s activities in recent years.


The administrative activities budget
does not include income and expenses stemming from the implementation of
monetary tools, the provision of credit to banking corporations and to other
financial institutions, activities related to managing liquidity in the
economy, and foreign exchange reserves investments. Such income and expenses
are reflected in the Bank of Israel’s financial statements.



1: The Bank of Israel’s Budget for 2017

data in NIS thousand)







Permitted commitments for coming years

Personnel ceiling

Original 2016 budget

Actual expenditure 2015


Bank of Israel







Management and Central Services







Performance of Bank’s functions







Representative office abroad



































Currency issue







Operation of the Citizens of Israel
Fund for natural gas profits







Central credit register







[1] The
Supervisory Council is the entity charged with supervising the administrative
activities of the Bank of Israel. The Supervisory Council consists mostly of
members from among the public. The Supervisory Council members from among the
public are Chairman Mr. Uri Galili; Mr. Ytzhak Edelman, CPA, and Prof. Nina
Zaltzman. The internal members of the Council are Governor of the Bank of
Israel Dr. Karnit Flug and Deputy Governor of the Bank of Israel Dr. Nadine