Bank of Israel, Finance Ministry announce team to boost banking competition, ease credit for small businesses

The Bank of Israel and the Finance Ministry are establishing an inter-ministerial team to introduce tools to increase competition in the banking system and the provision of credit to small businesses and households.

Finance Minister Bezalel Smotrich and Bank of Israel Governor Amir Yaron say in a joint statement that the team will be tasked with removing barriers to boost competition, and lower financing costs for the retail sector.

The team, headed by the central bank’s supervisor of banks and the Finance Ministry’s budget division head, will focus on examining and easing the barriers for the entry of new players into the banking system.

“The way to promote competition is to remove barriers that prevent the entry of new players into the financial system and the development of new areas of activity,” says Yaron. “To significantly bolster competition, the entry of new banks is required.”

Among the goals of the team is to formulate an outline for the provision of banking licenses that would allow non-bank entities to offer deposits and credit to businesses and households.

“This is a defining moment in the struggle to lower the cost of living,” says Smotrich. “Opening the deposit market will inevitably lead to competition for credit.”

“We are determined to create a diverse, competitive, and accessible credit market that will save Israelis thousands of shekels and strengthen the entire economy,” Smotrich adds.