Declaring a payment system as a “Controlled System” or a “Designated Controlled System”

 

A payment system is a system of rules, instruments, or procedures for the transfer and execution of payment instructions between its participants, including its operators.

 

Conditions for a declaration

In accordance with Section 2 of the Payment Systems Law, 5768–2008, there are two cumulative conditions under which the Bank of Israel Governor is permitted to declare a payment system as a “Controlled System”:

  • When the system’s activity is essential to the entire payments array in the economy;
  • When there is concern that the system’s activity is being conducted improperly, inefficiently, or unreliably, and may damage the payments array in the economy.

 

In accordance with Section 3 of the Payment Systems Law, 5768–2008, there are three cumulative conditions under which the Bank of Israel Governor is permitted to declare a payment system as a “Designated Controlled System”:

  • When the system’s activity is essential to Israel’s monetary and financial stability;
  • When there is concern that the system’s activity is being conducted improperly, inefficiently, or unreliably, and may damage Israel’s monetary and financial stability;
  • When it is important to apply the provisions of the Payment Systems Law concerning the finality of payments in the system and the protection of payments from a situation in which one of the system’s participants is dissolved, in order to maintain Israel’s monetary and financial stability.

 

Considerations for a declaration

Section 4 of the Payment Systems Law, 5768–2008 sets out that when declaring a system as a controlled system or as a designated controlled system, the Bank of Israel Governor is permitted to take a number of factors into account, including the following:

  • The total estimated monetary sum of payment instructions received or executed in the system on an ordinary day;
  • The estimated number of payment instructions received or executed in the system on an ordinary day;
  • The number of participants in the system;
  • The connection between the system and other controlled systems or the Stock Exchange Clearinghouse;
  • The extent of the system’s impact on the Israeli currency.
This page was last updated on: 29/01/2024