When Israel was granted independence in 1948, the power of note issuance was vested with the Anglo-Palestine Bank, which was refounded as Bank Leumi in 1950. Monetary policy and banking supervision remained controlled by the Ministry of Finance.
In 2010, the Bank of Israel was ranked first among central banks for its efficient functioning, according to IMD's World Competitiveness Yearbook.[2]
In March 2010, the Knesset approved a new Bank of Israel Law which took effect on June 1, 2010.[3] The new law defines the goals of the bank and gives the bank independence in determining its policy tools and the way of implementing them. The law changes the framework in which major decisions are made in the Bank of Israel. Decisions regarding the rate of interest and monetary policy in general will be made by a Monetary Committee, while the managerial decisions will be approved by an Administrative Council. This brings the Bank of Israel more in line with the decision making procedures of other financial institutions.
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