The Bank of Israel commends the establishment of the Financial Stability Committee

The Bank of Israel commends the legislative amendment that was passed by the Knesset yesterday, which will establish the Financial Stability Committee headed by the Governor of the Bank of Israel. The Bank is grateful to the main partners in the process: the Ministry of Finance, the Ministry of Justice, and members of the Knesset’s Finance Committee who succeeded in bringing the important process to a conclusion.

 

This step, which the IMF recommended several years ago and which the Bank of Israel has worked consistently to carry out, is particularly important in view of the financial system reforms being formulated. The numerous participants in the credit market and the division of responsibility among the various regulators require a view of the overall system and close coordination among regulators. This is one of the lessons from the global crisis, with the ultimate contagion of the financial risk that materialized in certain financial institutions to the overall system in the US and other economies. The establishment of the Committee is an important pillar in the maintaining of financial stability and will serve the economy, first and foremost the general public, who are the financial institutions’ main customers.

 

In the coming days, the Bank of Israel will begin accelerated staff work to prepare the Financial Stability Committee’s work procedures and ahead of its first meeting, to be held in the coming months.

 

In accordance with the law, the Financial Stability Committee members will be the Governor of the Bank of Israel (who will serve as Chairperson), the Director General of the Finance Ministry (alternate Chairperson), the Deputy Governor, the Finance Ministry’s Accountant General, the Supervisor of Banks, the Commissioner of Capital Markets, Insurance, and Savings, the Head of Payment System Oversight at the Bank of Israel, and the Israel Securities Authority Chairman. The Head of the National Economic Council will serve as an observer on the Committee.​