Acting as the Banker of the Government
Pursuant to section 48 (a) of the Bank of Israel Law, 5770-2010 (hereinafter - the Bank of Israel Law): "The Bank shall be the sole banker of the Government for its banking activity in Israeli currency." Accordingly, the Government manages all of its accounts in local currency and even some of its accounts in foreign currency at the Bank of Israel. the Bank of Israel's Banking and FinancialServices Unit is the entity that provides the Government Ministries with the following banking services: execution of money transfers in all payment methods currently available in the economy and in a variety of currencies in Israel and around the world; interest calculations for its interest-bearing accounts; daily account statements, balance confirmations; and more.
Banker of the government:
Section 48(a) states that "The Bank shall be the sole banker of the Government in its Banking Activity in Israeli Currency." Accordingly, the government manages all its domestic-currency accounts and some of its foreign-currency accounts with the Bank.
The Government may, with the agreement of the Bank, as stated in Section 48(b) of the Law, "obtain certain services from Banking Corporations or Financial Entities, provided this be done only in order to manage the Government's debt and fiscal activity." The government manages domestic- and foreign-currency accounts for its budgetary and extra-budgetary activity in Israel and abroad, for financial transactions vis-a-vis the Bank of Israel, and for the financing of activity unrelated to the budget, with the Bank of Israel.
The Comptroller of the Bank of Israel manages the government's domestic- and foreign-currency accounts with the Bank and provides the government with normal banking services: making and receiving payments for and on behalf of government ministries and auxiliary units, calculating interest on the government's interest-bearing accounts, preparing daily account records, confirming balances, etc.
Banker of the banks:
The banks deposit money with the Bank of Israel, in both domestic and foreign currency, in various types of deposits; some under the reserve requirements and some deposits of surplus cash made at the banks' own initiative in interest-bearing fixed-term deposits. The current accounts that the banks maintain with the Bank of Israel are used for the management of liquidity and for final settlement (the paper-based clearinghouse known as the Bank Clearing House or simply BCH; the banks' automated clearing house --ACH or Masav, its Hebrew acronym; and the Tel Aviv Stock Exchange, abbreviated as TASE). These accounts are managed by the Comptroller of the Bank of Israel.
In addition, the Bank of Israel provides banks with monetary loans by auction, discount-window ("overnight") loans, and settlement services for USD-NIS transactions that they conclude with each other using the "payment versus payment" method.
The banks' domestic currency clearinghouse, which settles checks and digital transactions, is supervised by the Clearing House Committee, appointed by the Governor of the Bank of Israel and composed of representatives of the Bank of Israel and the commercial banks. At the checks clearinghouse, managed at the Bank of Israel, representatives of the banks exchange checks and payment instructions once a day. This clearinghouse, situated near the banks' headquarters in Tel Aviv, processes hundreds of settlement actions every day, mostly in checks, at a financial value that adds up to hundreds of billions of shekels each year.
Banking of Financial Entities
Section 50 of the Bank of Israel Law provides as follows:
- The Bank may keep accounts for banking corporations and other financial entities, and, at the decision of the Governor, with the approval of the Committee, for central banks, monetary authorities and foreign banks, and all subject to terms and conditions to be determined by the Governor, including the collection of management fees and commissions or other fees and commissions;
- An account at the Bank may be managed in Israeli currency or in foreign currency, as will be determined by the Governor.
Accordingly, the banking corporations manage deposits of various types in shekels and in foreign currency at the Bank of Israel. The current accounts of banking corporations at the Bank of Israel are used for both liquidity management and settlements purposes (the "ZAHAV" (RTGS) system Clearing House; the Banks' Paper-Based (Cheques) Clearing House; the Banks' Automated Clearing House ("MASAV") and the Tel Aviv Stock Exchange Clearing House).
In addition, the Bank of Israel may provide banks with short-term monetary loans and deposits. For more information on the monetary tools of the Market Activity Division at the Bank of Israel, please click here
Questions and Answers
According to the Bank of Israel Law, these are the entities that can open an account at the Bank of Israel:
2. A "financial entity" as defined in the Bank of Israel Law, including a banking corporation;
3. Central Banks, Monetary Authorities and Foreign Banks, as decided by the Governor and with the approval of the Monetary Committee.
Customers and private entities in the State of Israel cannot maintain a bank account with the Bank of Israel.
The Banking and Financial Services Unit in the Accounting Division of the Bank of Israel manages its activities in shekel and foreign currencies accounts for the Government and its Independent Subsidiary Units, and provides banking services to the Government.
In addition, the banking corporations in Israel manage in the Bank of Israel current accounts and loans and deposits of various types - in shekels and in foreign currencies. Various financial entities also receive banking services from the Bank of Israel.
1. Current account management - Ongoing banking management of banking activity in accounts, including monitoring and control;
2. Foreign currency transfers to beneficiaries in Israel and abroad for the various customers of the Bank of Israel;
3. Transfers in shekels through the various clearing houses - the Banks' Paper-Based (Cheques) Clearing House; the Banks' Automated Clearing House ("MASAV") and the "ZAHAV" (RTGS) system Clearing House;
4. Payments and receipts in NIS and foreign currency to the customers of the Bank through physical Cheques;
5. The purchase and the sale of banknotes in shekels and foreign currency for the various customers of the Bank and in cooperation with the Bank's Currency Department;
6. The production of daily account statements, balance confirmations for the customers of the bank and various reports;
The unit provides banking services to central banks and to foreign financial entities abroad in accordance with section 50 of the Bank of Israel Law: "The Bank may maintain accounts for banking corporations and other financial entities, and, at the decision of the Governor, with the approval of the Committee, for central banks, monetary authorities and foreign banks, all under terms and conditions to be determined by the Governor, including the collection of management fees and commissions or other fees and commissions".
Similar to commercial banks in Israel, the Banking and Financial Services Unit represents the Bank of Israel and its customers as a participant in the payment and clearing systems in Israel. Following are the various types of the clearing houses:
The “MASAV” Clearing House - an entity in which the non-paper or cash interbank transactions are settled. Non-bank institutions and/or organizations also transfer authorized credit and debit instructions by directly to “MASAV”.
The Cheques Clearing House - most of the receivables (Cheques and credits and various debits and charges) presented by the banks in the Paper-Based Clearing House are Cheques, which are presented today only by electronic means. In addition, magnetized collection vouchers and non-magnetized receivables (manual receivables) are presented.
The “ZAHAV” Clearing House (Real-Time Gross Settlement - RTGS) – The “ZAHAV” Clearing House is a payment system that allows immediate and final transfer of funds between customers of banks and customers at other banks. In addition, in this system, the final clearing of all existing interbank payment systems is carried out, i.e.: the TASE Clearing House, “MASAV” and the Cheques Clearing House.
As part of the representation of the Bank of Israel, the Banking and Financial Services Unit is responsible for clearing payments on behalf of the customers of the Bank and for the activities of the Bank, it is backing up the customers of the Bank and the divisions of the Bank in the case of a state of emergency and it is the participating in the various interbank committees.
n Israel, the identification of participants in the financial system is performed by using a unique identification code for each entity (known as a "bank code"). The identification number allows payment service providers to operate in the payment systems and to serve the customers of the payment service providers, as part of their account identification details, for the purpose of making payments. As part of the process of opening the payment systems for non-banking participants, the Bank of Israel has decided that the identification code will be assigned to all banking and non-banking payment service providers who meet the underlying guide lines and conditions for obtaining an identification code.
The responsibility for assigning the Bank Code lies within the collaboration of the Payment Systems Supervision Unit with the Banking and Financial Services Unit at the Bank of Israel.
As part of the unit's activities as a banker for the Government and other customers of the Bank, the Bank of Israel is required to perform risk management. The risk components may contain various operational and business risks. In recent years, there has been a trend of increased controls and regulations in the global financial system, which is manifested in more cases of inquiries and stoppages of payments in global operations towards banks in Israel and abroad. Therefore, in order to ensure continued business continuity of the activities of the customers of the Bank, the Banking and financial Services Unit at the Bank of Israel is also required to implement a risk-based approach.
Foreign Currency Banking Services:
Monday to Thursday - between the hours of 08:00 to 15:30; Friday, intermediate days of certain Jewish festivals and holidy eves - between the hours of 08:00 to 12:30;
Email address: d-foreignTradeemail@example.com.
Shekel Banking Services:
Sunday to Thursday - between the hours of 08:00 to 15:30;
Email address: firstname.lastname@example.org