The Bank of Israel Holds a Conference on “A Look at the Future World of Payments”
The Conference presents the activities taken by the Bank of Israel as part of its strategic plan to promote financial infrastructures and digital means of payment in the Israeli economy and to encourage competition and innovation in the financial system. In addition, the Conference will feature the cutting edge of high technology from around the world in the area, and the additional steps that the Bank of Israel plans going forward to advance the world of payments as it strives to be at that forefront.
Ahead of the Conference, a survey was conducted of a representative sample of the public on their payment habits. For further information on the results of the survey,
The Conference was opened by the Governor of the Bank of Israel, Prof. Amir Yaron. The Governor had a dialogue with the Governor of the central bank of Sweden, Mr. Stefan Ingves, on the functions of a central bank in promoting the modern payments system.
The Governor of the central bank of Sweden, Mr. Stefan Ingves, said, “It was a pleasure to participate at the Bank of Israel's "Future World of Payments" conference today, alongside my dear colleague and friend Governor Yaron, and speak to the audience of industry leaders and distinguished regulators, regarding our strategic thinking on money and payments in the digital age. Israel and Sweden have some similar characteristics: We are both relatively small countries with a sound financial system, and an innovative and vibrant technological sector. All of these should enable us to move fast but safely towards a more advanced payment sector. We will continue to closely monitor after developments in Israel in this regard."
Mr. Oded Salomy, Director of the Payment and Settlement Systems Department at the Bank of Israel, presented the payment world’s roadmap and detailed the functions of the Bank of Israel in promoting fair, competitive, and stable payment system.
Oded Salomy said, “The payments sector is multidimensional. We are taking a series of steps to advance the payments area in Israel for activity and competition by all types of participants, who are expected later to expand the area of payments in Israel to smart credit, investments, savings, and more. We welcome the participation of a range of entities here at the conference—technology companies, credit companies, financial entities, banking corporations, and even analysts in the field of fintech who came here from abroad especially for the conference. The event today reflects the ongoing conversation we have with all participants in the area.”
Supervisor of Banks Mr. Yair Avidan surveyed the open banking reform and the approach that underlies the reform. According to this approach, the information that is collected about the customer is information that belongs to the customer, and as such, the customer is the one to decide who will be able to use the information and for what uses.
Supervisor of Banks Mr. Yair Avidan said, “This reform is the first step and the foundation stone for realizing the vision and strategy of establishing and creating an open financial world, in which not only banks serve as sources of information. Rather, it is a world that integrates data on long-term savings and the pension world, and ultimately we should work toward an “open economy” world, at which point we will realize the “open information” vision.
In the session dealing with the roles of the government and regulators in promoting innovation in the world of payments—as regulators, policy makers, or participants, each participant presented how they act in their sector in order to advance the market in the complex situation in which the legislation has not yet been finished.
Israel Securities Authority Chair Ms. Anat Guettta presented the financial infrastructures for promoting competition that was promoted by the Israel Securities Authority. “Currently, the payments market is operated by the banking system. Although technology entities have penetrated the market in recent years, the service is still based on credit cards.
This is a significant point, because the ultimate goal of opening the payments market to competition is to reduce costs for businesses and consumers, as well as to vary the digital means of payment.
One of the critical barriers to opening the payments market to competition is the connection to the payment systems: Masav and Zahav, in which the direct participants today are banks and credit card companies.
The Strum Committee recommendations already emphasized the critical role of the payments systems and the need to develop them for nonbank participants.
After 7 years, we are still not there. However, here in this conference hall, are the forces necessary for completing the goal successfully, soon.”
Capital Market, Insurance and Savings Authority Supervisor Moshe Bareket provided details on fintech, insuretech, and the Israeli economy from the perspective of the Capital Market Authority. “I would like to first thank my friends at the Bank of Israel, headed by the Governor, for the invitation and the excellent collaboration over the past few years, for advancing and increasing the sophistication of the Israeli financial system. The public’s trust in Israel’s financial system is extremely important, it is responsible for a significant part of the resilience of Israel’s financial system. All financial regulators have to work together to ensure the public's trust in the system. I think that even when it comes to payment and information service providers, we have to meet the highest standards in order to continue to ensure the public's trust in the system. Regarding the world of fintech licensing, currently an entity that wants to obtain a license has to reach the Capital Market, Insurance and Savings Authority. There is some disinformation on the issue, but that is the current situation. Entities that arrive and have the knowledge required to work with regulators will receive a license within three months. We have proven this in our work in the past and we will prove it going forward as well. I believe that with the proper regulation, we will continue to ensure the financial system’s resilience and the public's trust in it.”
At the end, Mr. Yaheli Rothenberg, the Accountant General, presented how the government, as a main participant in the market, accelerates innovation in the government payments system.
Parallel sessions hosted senior officials in the payments industry in Israel and abroad:
· In a session with the participation of senior executives in payment aspects at Booking, Uber, Wix, and Fiverr, participants discussed how those companies offer payment services and financial services worldwide and when will there be such activity in Israel. The panel members shared their view of the sector with regard to opportunities to penetrate the financial world via the payments world.
· In a session with the participation of senior officials in the payments sector, fintech, and social organizations dealt with the challenges of making the world of payments and financial innovation accessible to the Israeli market. The panel discussed questions such as could all population strata benefit form the financial innovation in the world of payments? Who would be left behind? And why is it so difficult to penetrate the Israeli market?
· In another session, Dr. Milly Perry and Mr. Nir Kouris presented advanced payment technologies and explained where the payments world is headed. In the session, innovative concepts were explained, including blockchain technologies, devices, metaverse, and DAO, and showed how they are expressed in the future world of payments. In addition, the Deputy Supervisor of Banks and Head of the Technology and Innovation Division, Mr. Daniel Hahiashvili, held a discussion with Mr. Sam Everington from Starling Bank, who told the story of one of the leading Neobanks in the UK, which led a revolution there.
The last session of the conference dealt with central bank digital currencies (CBDC). This is one of the main issues for the payment sphere and central banks, which are currently examining the issue extensively before deciding on whether or not to issue a digital currency.
The session began with a panel discussion among top international experts who are dealing with that area, who shared their global experience in promoting CBDC in various countries and the challenges with which they are dealing.
Following that, Advisor to the Deputy Governor and the Digital Shekel project manager at the Bank of Israel, Mr. Yoav Soffer, presented the project, and the significance of managing the project of examining and preparing a plan, without having reached a decision on whether or not to put the plan into effect. Soffer described the four targets of the digital shekel project for the coming year: preparing the plan based on scenarios for the possible decision to issue the digital shekel; a comprehensive analysis of the economic ramifications, building a detailed document of the features of the digital shekel, and analyzing and studying the technological alternatives and challenges and opportunities in the area.
Advisor to the Deputy Governor and the Digital Shekel project manager Yoav Soffer said, “The digital shekel, if issued, will make the Bank of Israel’s money accessible via modern technology, and will ensure the continued ability to use it over the coming decades, alongside cash and other means of payment. The economic ramifications, the business and legal characteristics, and the technological opportunities and risks require a comprehensive analysis, so there is a lot of work ahead of us.”
The Conference was concluded with an address by Bank of Israel IT Department Director Lior Georgi, and Tomer Mizrahi, the Bank’s CTO and the coordinator of the project’s technological team, who provided for the first time a look at the experiments and the technological research about the digital shekel at the Bank of Israel.
Bank of Israel IT Department Director Lior Georgi said, “As Director of the IT Department at the Bank, and the Governor’s advisor regarding technology, I am of the view that the Department has to be at the forefront of technology in all technological areas with which the Bank deals, and in particular this fascinating issue. We have to understand the advantages and disadvantages, the various risks, the existing standards in the sector, and the abilities inherent in realizing a CBDC.”
For additional details on the technological experiments for the digital shekel,Also participating in the address was Daniel Eidan, from the BIS Innovation Hub—Hong Kong, who spoke about the combined experiment on “Project Sela” with the Hong Kong Monetary Authority to check the preparedness for a retail central bank digital currency.
Daniel Eidan, Advisor and Solution Architect at the BIS, said, “The BIS will enlist to continue the collaboration with the Bank of Israel to promote the financial infrastructure of the State of Israel at home and worldwide.
I am happy to be here today and to be the standard bearer for Project Sela, and will be happy to return and announce the success of the project and the move to the following stages.”
For an expanded discussion on the collaboration on Project Sela between Israel and Hong Kong and the BIS,.
In addition, at the conference, several exhibits that had been prepared specifically for the conference were shown:
exhibit by fintech companies that presented advanced products from the payments sphere, the product of collaboration with the Fintech.il community and the Ministry of the Economy.
A presentation by the Access Israel nonprofit organization that illustrates the challenges in payments at payment terminals that are not accessible and raises awareness of this important issue.
An exhibit by the Bank of Israel on the development of means of payment from their beginning until today, which illustrates the strong connection of the Jewish people’s history that is interwoven in the State’s means of payme
. Nurit Felter-Eitan, Director of the Communication, Government, and Community Relations Department, who was responsible for producing the conference, concluded: “For the first time after a prolonged period in which there weren’t any in-person conferences, the Bank of Israel held a conference of this size with hundreds of participants from the financial system, the payments industry, fintechs, the academic world, government, the market and the public, in order to advance together, to solve obstacles, but also to maintain the stability and to manage risks in order to bring the payments world forward for the benefit of the Israeli public.”