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BANK OF ISRAEL
Office of the Spokesperson and Economic Information
December 19, 2011
Press Release
The Bank of Israel publishes its work plan and budget for 2012; the budget will
total NIS 798 million
The Bank of Israel today is publicizing the main points of its work plan and
administrative budget for 2012.
In October, the Bank's Administrative Council was appointed, in line with the Bank of
Israel Law, 5770-2010. Five members of the Council are representatives from among
the public, and the other members are the Governor and Deputy Governor. This is the
first year that the Council approved the Bank's annual budget and submitted it to the
Knesset's Finance Committee.
Today, the Knesset's Finance Committee discussed the Bank's annual budget. The
budget (presented hereinafter) that was submitted encompasses the administrative
activities of the Bank and is constructed in order to allow the Bank to carry out its
functions and achieve its primary goals for the year.
A.
The Bank of Israel's Objectives, Functions, and Goals
The Bank’s objectives as specified in the Bank of Israel Law are:
1. To maintain price stability as its central objective;
2. To support other objectives of the Government’s economic policy, especially
growth, employment, and the reduction of social gaps, provided that, in the
Monetary Committee’s opinion, this support shall not prejudice the attainment of
price stability over the course of time;
3. To support the stability and orderly activity of the financial system.
The Bank’s functions as specified in the Law are:
1. Managing monetary policy;
2. Holding and managing the Foreign Exchange reserves of the State;
3. Supporting the orderly activity of the Foreign Exchange market in Israel;
4. Acting as banker of the Government;
5. Regulating the economy’s payment and settlement systems so as to ensure their
efficiency and stability;
6. Issuing currency and regulating and guiding the cash system of the economy;
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7. Supervising and regulating the banking system.
In addition, the Governor shall serve as advisor to the Government on economic
matters.
The Bank’s main targets for the coming years as determined by management are
shown below:
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






Implementation of the new Bank of Israel Law
Promotion of reforms in the financial system (including the banking system) and in
the capital market
Development of macro-prudential policy and instruments to strengthen the
economy’s financial stability
Strengthening the role of the Governor as advisor to the government on economic
issues
Development of the Bank’s human capital, and recruitment of and keeping staff of
the highest quality
Upgrading the information and statistics systems
The development of state-of-the-art technological infrastructures
The issue of a new currency series
B.
The Bank's Main Projects in 2012
The following are several major projects planned for 2012:
An integrated computer system for the organizational, management and internal
systems of the Bank (Enterprise Resource Planning, ERP)
In mid-2011, the first stage of the installation of an ERP system (developed by the
SAP corporation), and the switchover of some of the old systems that had been
operating in the Bank, was completed. In 2012, the second stage of the installation is
planned. This will allow the integration of several areas to a shared database, with
analysis capabilities, portal tools and a management reporting system.
A computerized system for managing the foreign reserves––Integrated Treasury
Management System (ITMS)
In 2009–11, a new computerized system for managing the foreign exchange reserves
and the Bank's activities in the domestic market, developed by Wall Street Systems
(WSS), was installed in the Bank. The second stage of this project is planned for 2012.
The system will assist in implementation of the new Bank of Israel Law, and
expanding the types of assets that the Bank uses for the management of the foreign
exchange reserves. The system supports all areas of foreign exchange reserves
management (back office, middle office, and front office functions, as well as the
control system), and includes functions that assist with investment-related activities
(such as recording transactions, message creation, management of market risks,
accounting development, cash flow management and reconciliation of nostro
accounts).
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Bank of Israel central data warehouse (DWH)
This project is the construction of a new central infrastructure for managing economic
data at the Bank of Israel. The central data warehouse will contain most of the
economic information in the Bank, and it will service Bank employees as well as
external users. So far, data on specific areas of financial activity in the economy have
been entered. This project is expected to take another few years, during which most of
the Bank of Israel's data on the financial system will be incorporated into the
warehouse, and advanced tools will be integrated for the input and improvement of the
data and their retrieval and analysis.
Regulatory information infrastructure
The project is to develop an information infrastructure for advanced data management
for the Banking Supervision Department. With the switch of the Banking Supervision
Department to a risk-focused system of supervision as is the accepted practice in the
major regulatory authorities around the world, and the adoption of Basel II in Israel, a
project was initiated to set up a new support system. When the project is completed,
the supervisory authority will have available an advanced information system that
includes a new system of receiving data, a data warehouse that enables data retrieval
and flexibility in the way the information is shown, a comprehensive database showing
all the information and data relating to each banking corporation, and advanced
research tools.
Planning the renovation of the Bank's premises in Jerusalem
The planning of the renovation of the Bank’s premises in Jerusalem will continue in
2012. The extent of the renovation and its required budget will be determined by the
Council. The renovation will be carried out in line with the Council decision,
beginning in 2013.
The issue of a new currency series
In order to maintain the public’s confidence in the currency system, it is generally
accepted practice in advanced countries to replace the series of banknotes in circulation
once every 10–15 years, even without any extraordinary events, due to obsolescence of
existing security features and the development of new and sophisticated security
features aimed at minimizing counterfeiting. As such, the Bank decided to replace the
currency series in Israel, and to integrate into the new series sophisticated security
features, among the most advanced in the world, which were developed in recent years.
In 2012, funds will be budgeted for the process of planning the issue of the new series,
and in 2013 the new series will be issued.
C.
The Bank's Budget
The Bank of Israel's budget allocates funds for the administrative activities of the Bank
necessary for fulfilling of its functions and achieving its goals. In accordance with the
Bank of Israel Law, the Bank of Israel's budget is divided into several areas of activity:
1. Management and Head Office (the expenditure budgets of the bodies that deal with
the management of the Bank and the provision of services and support);
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2. Carrying out the Bank’s functions (the expenditure budgets of the departments that
perform the Bank’s functions);
3. Representative office abroad;
4. Pensions;
5. Investments;
6. Income;
7. Reserve;
8. Currency issue.
The budget of the Bank of Israel for 2012 totals NIS 798 million, compared with NIS
704 million in 20111, and NIS 674 million in 2010. The NIS 95 million (13.5 percent)
increase in the budget for 2012 is attributed primarily to:
Pensions: An increase of NIS 49 million (23 percent) stems from a forecast increase in
the number of retirees due to the coming into effect of a change in wage agreements.
The increase in the number of retirees is expected to lead to increased efficiency and
the hiring of young employees who have a lot to contribute at a lower salary.
Reserve: In 2012, a NIS 19.5 million reserve was allocated to the Administrative
Council, compared with only a NIS 3.2 million reserve in 2011. The difference is
mainly due to the fact that in 2011, the reserve was allocated NIS 10 million from the
sale of an asset in Tel Aviv. The total reserves in the Bank's 2012 budget reaches NIS
35 million. These reserves will only be used under the conditions set for their use.
Investments: In the Bank's 2012 budget, there was an increase of NIS 20.6 million
(33.7 percent) in the investments budget. In 2012, the Bank plans to carry out several
major infrastructure projects in the business continuity, logistics, and technology areas.
In addition, there are investments related to the issue of a new series of banknotes. For
details on major projects, please see Section B above.
Budget in future years: 66 percent of the budget for permitted commitments for
coming years stems from the permitted commitment for the issue of new currency. The
budget for printing money is expected to increase from NIS 58 million in 2012 to NIS
308 million in 2013, due to printing costs of the new series of banknotes. Accordingly,
the effect on the overall budget in 2013 will be greater.
Personnel ceiling (maximum): The maximum headcount for 2012 is 701 positions
(compared with 726 positions in 2011). In 2011, actual employment was significantly
lower, at only 706 positions.
The administrative activities budget does not include income and expenses stemming
from the sale of monetary instruments, granting of credit to banking corporations and
other financial institutions, activities related to managing liquidity in the economy, and
1
On January 23, 2011, the Finance Committee was informed of an increase in the Bank of Israel budget
for 2011 of NIS 9 million, from NIS 694 million to NIS 703.7 million.
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foreign exchange reserves investments. Income and expenses from these types of
activities are reflected in the Bank's financial statements.
Table 1: The Bank of Israel’s Budget for 2012
(NIS thousand)
2012
01
02
03
04
05
06
07
08
Bank of Israel
Management
and Head
Office
Performance of
Bank’s
functions
Representative
office abroad
Pensions
Investments
Income
Reserve
Currency issue
Expenditure
budget
798,165
207,914
169,498
Transfers
from
2011
18,969
Permitted
commitments
for coming
years
477,488
17,665
Personnel
ceiling
701
275
Original
2011
budget
703,741
212,421
Actual
expenditure
2010
607,238
164,742
854
67,056
424
162,484
149,447
2
3,150
2,066
209,142
61,128
(430)
3,219
52,628
195,012
44,421
(1,628)
3,897
257,813
81,732
(452)
19,571
58,193
15,783
55
75,078
1,817
515
317,635
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53,178