Directed by the Bank Controller within the central bank, this new commission has to deliver its recommendations to the government within the next 120 days, i.e. by April 15th. The commission has to make a report to help "increase competition between banks, simplify banking products, empower consumers and improve credit services to households while at the same time ensuring the soundness of the banking sector". Indeed, in Israel, banks' funding comes primarily from deposits and not from the financial markets which means that the need for effective competition to lower prices is even more critical.
Yet, Israeli banks that have been able to withstand the crisis so far should not worry too much. In November 2006, a parliamentary committee had investigated measures to reduce excessive bank charges. Their recommendation was to remedy the lack of competition that drives prices of banking up by opening the market for bank deposits to new competitors, including foreign institutions. Since then a few foreign banks have entered the Israeli market, but only in the B2B space, or the higher end of the market like wealth management. Bank rates, meanwhile, have barely declined: between 2007 and 2011, households saved about NIS 34 a year (€7 euros) in bank charges.
So the question is now: will this new commission succeed where the previous ones have failed? Time will tell but we should not hold our breath.
Source Credit Israel