Currency and Banking
Despite the virtual elimination of exchange controls, foreign exchange transactions must still be reported to the Bank of Israel. Foreign residents and new immigrants can maintain an unrestricted, freely transferable account (entitled "Patakh" nonresident accounts) with Israeli commercial banks. Once the "Patakh" account is established, foreign investors can open a shekel account, which allows them to freely invest in Israeli companies and securities. These shekel accounts are completely convertible into foreign exchange.
Most foreign currency transactions are conditioned upon being carried out through an authorized dealer. Specifically, an authorized dealer is a banking institution licensed to arrange, inter alia, foreign currency transactions for its clients. The authorized dealer operates in accordance with the procedural instructions of the Comptroller of Foreign Exchange.
Israel has a highly developed and modern banking system. There are commercial banks, mortgage banks, financial institutions, merchant banks, representative offices of foreign banks, and an investment finance bank. A full range of commercial services and support is provided by those banks, many of which maintain branches and offices in the major international financial centers. Approximately 75 percent of the total assets of the commercial banks is held by three major banking groups (Bank Hapoalim, Bank Leumi and Israel Discount Bank).
In 1983, the Israeli banking industry went through what became known as the "bank share crisis." As a result, the Israeli government intervened and became a major non-voting shareholder of the leading banks. The government has sold controlling interests in several banks and is continuing the privatization process with respect to the remaining shares held by the government in more banks as well as with respect to the other banks.
The Bank of Israel is the official central bank. Among its numerous responsibilities, the Bank of Israel is also responsible for the issuance of currency, monetary policy, and regulations.
© 2000 Mena Report (www.menareport.com)