Oded Salomy spoke today at the annual directors update conference held by the Israel Directors Union.  His remarks dealt with the Bank of Israel’s activities to foster innovation in the financial system, the payments space, and banking services.  Salomy explained that as the builder and operator of the financial market infrastructures, the Bank of Israel implements innovation in the financial system by upgrading and developing the independence of essential core systems in the payments ecosystem.  He added that the Bank encourages  digital financial services by leading the economy towards contactless payments; digital wallets, including those of international companies, that have begun operating in Israel; instant account-to-account payments, known locally as Faster Payments; establishing the credit data register; licensing a new digital bank; supporting the establishment of a computer services center for new and small banks, in cooperation with the Ministry of Finance and the Ministry of Economy; promoting the open banking project; licensing new acquirers; promoting current account switching through one-click mobility between banks; and more.

 

Salomy emphasized the challenges being faced.  He addressed a number of open questions regarding the principles of supervision over new financial companies and services, how to prevent regulatory arbitrage, how to protect privacy and the fair use of individuals’ data while encouraging competition in the field, how to advance competition while maintaining stability, how to maintain a reasonable regulatory burden, and how to make sure that “fiat” currencies (such as the shekel, the dollar, the euro, and others) remain relevant in the future world of digital currencies.

 

Salomy completed his remarks by stating that “The transition to a digital economy is already well underway, and the Bank of Israel is instituting a policy to ensure that domestic progress aligns with developments in the rest of the world.”​