Development of a new currency to be known as the shekel (properly, sheqel) was approved by the Israeli Knesset on 4 June 1969.

The governors of the Bank of Israel did not consider the time ripe until November 1977, when studies for its implementation began.

Prime Minister Menachem Begin and Minister of Finance Simcha Erlich approved a proposal to redenominate the Israeli pound in May 1978; the proposal called for the currency to be exactly similar except for the removal of a zero from the inflated pound and agorot denominations.

In 1981, the value of Israeli currency continued to fall, reaching IS 15.60 per U.S. dollar at the end of the year.

[4] The old shekel is no longer in circulation, has been demonetized, and is not exchangeable to current legal tender by the Bank of Israel.

The initial runs were struck at foreign mints in order to preserve the secrecy of the coming currency conversion.