IMF Publishes Reports on the 2018 Article IV Consultation with Israel
IMF published its staff report and selected issues report after concluding the 2018 Article IV consultation with Israel. The IMF assessment points to a healthy banking system. The staff recommends that banking supervision should continue its efforts to operationalize a risk-focused approach. Financial regulators should harmonize regulations in areas of overlapping activity to avert regulatory arbitrage. Moreover, safeguarding the operational independence of financial regulators remains critical to their effectiveness.
The staff report reveals that the banking system in the country is healthy. Capitalization, loan quality, and profitability continued to improve in 2017. The leverage ratio rose to 7.5%, which exceeds that in most advanced economies. All of the five large banks (accounting for 95% of banking sector assets) met the capital requirement, enabling them to resume or raise dividend payouts in 2017. The five largest banks account for 95% of the banking sector assets and, therefore, the authorities are taking a range of measures to promote competition in the sector. Entry of new banks would be welcome, with appropriate deposit insurance and resolution arrangements to contain fiscal costs from potential failure. Reinforcing the financial stability framework is critical to complement the progress being made on enhancing competition. Adoption of the Solvency II framework in 2017 by the Capital Market, Insurance, and Saving Authority (CMISA) is a welcome step, with the aim to achieve full compliance by the end of 2024.
The authorities are also taking welcome steps to enhance the management of technological risks, including those from fintech, and improve Cyber Security. The Bank of Israel supports innovation in the banking system by streamlining the approval process for new products, while allowing for digital banks, cloud technology, and the sharing of IT and operational infrastructure. The Bank of Israel intends to step up the monitoring of risks that could emerge as fintech activities increase. Close coordination among regulators in relation to fintech may better facilitate fintech development and utilization. The Bank of Israel, in conjunction with the National Cyber Authority, the MoF, and banks, has established a Banking Cyber Center in 2017 to facilitate inter-agency sharing of intelligence about cyber alerts and help deal with cyber events that affect banks.
The selected issues report analyzes the macro-fiscal implications of an increase in infrastructure spending and discusses the trends in inequality and poverty in Israel, while exploring policy measures to address these issues.
Related Links
Keywords: Middle East and Africa, Israel, Banking, Insurance, Financial Stability, Solvency II, Article IV, Fintech, IMF
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Related Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards