5 Mils – British Palestine

In 1942, the currency situation in British Mandatory Palestine was defined by the Palestine Pound (£P), a currency board system established in 1927 and pegged at parity to the British Pound Sterling. This arrangement provided monetary stability but meant local authorities had no independent control over monetary policy. The currency was issued by the Palestine Currency Board in London, with notes and coins circulating alongside those of other currencies, particularly Egyptian and French, in the wider Levant.

The Second World War profoundly impacted this system. To support the massive British and Allied military presence in the region—a key front against the Axis—huge amounts of currency were imported to pay for troops, supplies, and infrastructure. This led to a significant increase in the money supply, which, combined with wartime shortages and disrupted trade, created strong inflationary pressures. Rationing and price controls were implemented to manage these pressures, but the cost of living rose steadily.

Furthermore, the war accelerated the development of a localized banking and financial sector. The Histadrut (General Federation of Labour) and other Zionist institutions expanded their credit cooperatives and financial operations to support the growing Jewish wartime economy and agricultural settlements. This period saw the strengthening of the financial foundations that would later underpin the future State of Israel, even as the official currency remained the British-administered Palestine Pound until the end of the Mandate.