Remarks by the Supervisor of Banks this morning at the Knesset’s Economic Affairs Committee: The Banking Supervision Department’s activity during the Coronavirus crisis
The Supervisor then presented the main steps taken by the Banking Supervision Department during the coronavirus crisis, divided into 3 categories: 1. Protecting depositors’ money; 2. Assisting households and businesses; 3. Increasing the supply of credit in the economy and preventing an increase in interest rates despite the increase in risk. The steps taken include: enhancing the following and the supervision of the banking system by closely monitoring the risks and carrying out stress tests for various scenarios, reducing the regulatory capital requirement by 1 percentage point, formulating a framework for deferring loan repayments in order to assist households with getting through the crisis, regulatory leniencies in extending housing credit, steps to assist customers who have encountered difficulties and to ensure the providing of essential banking services throughout the crisis through a range of means.
In concluding his remarks, the Supervisor referred to the considerable uncertainty that characterizes the crisis, and to the increase in the economic risk level. In accordance with and guided by the Banking Supervision Department, the banking system carried out a lessons-learned process after the first wave. The Banking Supervision Department makes extensive use of the tools at its disposal in order to minimize the adverse impact to households and small businesses and to assist them in enduring the situation. As such, the Banking Supervision Department examines additional steps at all times, while examining and studying the steps taken by other supervisory authorities around the world. In our view, the steps need to be taken with care, with an emphasis on maintaining the stability of the banking corporations in which the public’s money is deposited.
The presentation showed up to date data on credit to businesses via the government funds, the development of credit and interest rates during the course of the crisis, and the scope of loan repayment deferrals.