•  In 2005 the positive trends evident in 2003 and 2004 in the markets and the financial institutions continued, and the financial system showed stability. 
  • Against the background of the improvement in the domestic and global economic environment in which the financial system operates, the share market was buoyant, the bond and foreign currency markets were relatively calm, and borrowing by businesses increased. 
  • The banking system became more resilient, due to its improved capital adequacy and the reduction in credit risks. Insurance companies showed unchanged capital ratios, but concurrently the rise in credit accelerated. 
  • The Bachar and other reforms implemented in the last few years are expected to boost the resilience of the financial market in the long run, as they promote the reduction in the banks' dominant position and the continued development of the long-term-savings markets and nonbank credit. 
  • In the transition period of the reforms, systemic financial risks are expected to increase, and in particular credit risk among institutional investors, which make it necessary to take steps in the areas of structure, organization, enforcement, and information available to the public. 

The Financial System - Full File