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The Israeli pound (Hebrew: לירה ישראלית Lira Yisraelit) became the currency of Israel shortly after the creation of the state in 1948 and was abolished in 1980 when it was replaced by the (old) Sheqel.
The British Mandate of Palestine, which administrated the territory now known as Israel prior to May 15, 1948, issued the Palestinian Pound — a currency equal in value and pegged to the UK Pound, which was divided into 1000 Mils. Most banknotes in circulation were issued by the Palestine Currency Board , but the Anglo-Palestine bank of the Zionist movement issued banknotes of its own bearing the same values and similar in shape.
Israel inherited the Palestinian Pound, but shortly after the establishment of the state, new banknotes and coins were issued, bearing the name of the new state. On these banknotes the term Lira replaced the Pound, and the Hebrew name pruta replaced the Mil. The pegging to the UK Pound was abolished within several years and, in 1960, the sub-division of the IP was changed from 1000 prutot to 100 agorot per 1 IP.
During the 1960s, a debate over the non-Hebrew name of the Israeli currency resulted in a law ordering the Minister of Finance to change the name Lira into a Hebrew name: Sheqel (שקל). The law allowed the minister to decide on a proper date for the change.
The law didn't come into affect until February 1980, when the Israeli government decided to change the monetary system and introduce the sheqel at the rate of 10 pounds for 1 sheqel. The high rate of inflation during that time forced the Israeli government to change the currency again in 1985, when the New sheqel was issued at a rate of 1000 old sheqalim for 1 new sheqel.
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