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(photo credit: Ariel Jerozolimski)
The next facelift for the country's banknotes, which make up 96 percent of the money in circulation,, may give new meaning to the saying "paying with plastic" after the Bank of Israel said Sunday it soon may replace the current low-quality bills with polymer, or plastic, banknotes.
"The Currency Department will be issuing the next issue of NIS 20 notes based on polypropylene, a polymer which is becoming more popular in many countries due to its durability," the central bank said in the annual report of its currency department.
The central bank is trying to replace the old NIS 20 notes lost through wear and tear and used by 10% of the public. In an effort to improve the life of the NIS 20 banknote, the currency department released an improved banknote in 2006 printed on higher quality paper with additional coating.
In addition, last year it began planning a new banknote issue series that will be issued in the next four to five years and include changes to the banknote design, improved security features and changes in the quality of banknote paper.
The report showed that banknotes and coins in the hands of the public and in bank tills, increased by 4.6% and totaled NIS 25.5 billion at the end of 2006, compared to NIS 24.4b. at the end of 2005. Out of the NIS 25.5b. held in the hands of the public, 96% of the value of the currency in circulation in 2006 were in the form of banknotes.
Last year, the use of the NIS 200 banknote became more and more prominent, accounting for 18% of total notes in circulation, up from 17%, as they were more widely distributed through ATMs. Still, the most widely used banknote continued to be the NIS 100 note, which made up 53% of all bills in circulation, while, the proportion of NIS 50 banknotes out of total notes in circulation continued to fall last year, to 19% from 20%.
The most used coins by the public were the 10-agorot coins, used for change on local public transport, which accounted for more than half of the coins or 51% in circulation. The NIS 1 coins, many of which are used for parking meters and vending machines, constituted 23% of all coins in circulation in 2006, while the share of higher value coins - NIS 5 and NIS 10 - fell, with each accounting for only 3% of total coins in circulation.
The central bank has announced plans to introduce a new NIS 2 coin into circulation by the end of the year. It also is trying to remove the 5-agorot coin from circulation.
At the same time, the report found that a considerable number of coins were "lost" in circulation.
"Loss is a natural consequence of heavy daily usage of coins, which are a low-value means of payment," the report stated, estimating the loss of coins to between 41% and 77% for the 5-agorot, 10-agorot, half-shekel and NIS 1 coins.
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