The new shekel, also spelled sheqel, is the official currency of the State of Israel, and it is also used in the Palestinian territories of the Gaza Strip and the West Bank. Here is a brief overview of the new shekel's history, banknotes, and coins.
The first major currency to be used in the State of Israel was the Israeli lira, also known as the Israeli pound. It was first used in August 1948 and remained in use until 24 February 1980, when it was replaced by the old sheqel. Israeli lira banknotes were originally issued by the Anglo-Palestine Bank, but in 1952 the Anglo-Palestine Bank changed its name to Bank Leumi Le-Yisrael (Israel National Bank). Then, in 1955, the Bank of Israel was established and officially took on the responsibility of issuing banknotes. The lira was originally divided into 1,000 prutot, but then in 1960 this was changed to 100 arorot.
A debate over the non-Hebrew name for the currency rose in the 1960s, and eventually a law was established that ordered the Minister of Finance to change the currency's name from lira to sheqel. This new name, however, did not come into effect until February 1980, when the monetary system was restructured. In February 1980, the sheqel was introduced at a rate of 1 sheqel = 10 lirot.
Both the lira and the old shekel saw frequent devaluations against the US dollar and other foreign currencies starting in the early 1960s and intensifying in the mid-1970s. This led to hyperinflation of the old shekel in the mid-1980s, which in turn led to the enactment of the 1985 Economic Stabilization Plan to control inflation. It was this economic plan that introduced the new shekel.
The new shekel officially replaced the old shekel at a ratio of 1000:1 starting on 1 January 1986.
Today's Israeli shekel banknotes come in denominations of 20, 50, 100, and 200 sheqelim, and are red, green, orange, and blue, respectively. They feature prominent Hebrew figures, including poets and political leaders, on the obverses. The reverses feature prominent landmarks and imagery from major historic events, such as Jewish volunteers in World War II.
New shekel coins come in denominations of 1, 5, and 10 agorot; ½, 1, 2, 5, and 10 new sheqelim. Most feature the state emblem prominently on the obverse and then he value and date of issue on the reverse.