N.J. Stat. § 40A:27-18
Notwithstanding any restriction contained in any other law, the State and all public officers, municipalities, counties, political subdivisions and public^bodies, and agencies thereof, all banks, bankers, trust companies, savings banks^and institutions, building and loan associations, insurance associations and other persons carrying on any insurance business, and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any^sinking fund moneys or other funds belonging to them within their control in any^bonds of a local unit authorized pursuant to this chapter, and the bonds are authorized as security for any and all public deposits. These bonds and the interest thereon shall be exempt from taxation except for the transfer inheritance taxes.
N.J.S. § 40A:27-18