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Questions and Answers

Payment and settlement systems oversight is a central bank function that regulates the payment and settlement systems in the economy, with the aim of ensuring their stability, efficiency, and proper functioning, through regulations, assessments, and examinations.


In accordance with Section 2 of the Payment Systems Law, 5768–2008, there are two cumulative conditions that must be met in order for the Governor to declare a payment system a “controlled system”:


  • The system’s operation is essential to the entire payments array in the economy;
  • There is concern that the system’s improper, inefficient, or unreliable operation may impair the payments array in the economy.


In accordance with Section 3 of the Payment Systems Law, 5768–2008, there are three cumulative conditions that must be met in order for the Governor to declare a payment system a “designated controlled system”:


  • The system’s operation is material for monetary and financial stability in Israel;
  • There is concern that the system’s improper, inefficient, or unreliable operation may impair monetary and financial stability in Israel;
  • It is important to apply the provisions of the Payment Systems Law concerning finality of payments in the system and protection of payments from the dissolution of one of the system participants, in order to maintain monetary and financial stability in Israel.

The PFMI are international standards for supervising financial market infrastructure: payment systems, securities centers, securities systems, main counterparties, and trade databases.  The principles were published in April 2012 by the Committee for Payment and Settlement Systems (CPSS) and the CPSS-IOSCO, with the aim of ensuring the efficiency and stability of payment systems.  On November 20, 2014, the Bank of Israel—like many other central banks—announced the adoption of the CPSS-IOSCO principles and their application to the payment systems in Israel that have been declared controlled systems.  This was done in conjunction with the various regulators.

In accordance with the Payment Systems Law, a payment system operator is the entity responsible for operating the payment system.

In accordance with the Payment Systems Law, a payment system participant is an entity that is permitted to issue or transfer payment instructions directly in the payment system, and that is defined as a participant pursuant to the system rules.


​Immediacy: The payment is conducted immediately. The recipient of the payment is able to use the money within minutes from the time when the payment is conducted (excluding exceptional cases).

Finality: The payment is final and irrivocable

Apart from the commercial banks and the foreign banks operating in Israel, which transfer all their inter-bank activity via the Zahav system, the new system provides rapid, efficient and secure settlement services for numerous additional users-the finance managers and comptrollers of all organizations and companies that transfer and receive important and urgent payment instructions daily: institutional investors (pension funds, provident funds and insurance companies), large and medium-sized companies and enterprises, investment houses and brokers. Those engaged in shekel-foreign-currency conversions are also likely to benefit from the great advantage of using the new system, since they can now settle the shekel leg of their activity in a secure maner. The Zahav system, usage of which is not dependent on a minimum amount, also provides maximum protection and security for households conducting transactions that involve the transfer of goods against payment, such as the purchase and sale of apartments and vehicles.

It should be noted, that the execution of instruction in the system usually lasts for just a few minutes and immediately on completion, the user know that the payment is final and irrevocable. This feature offers a major advantage for payment recipients, because it enables them to use the money immediately, like cash.​

In order to transfer a payment in the Zahav system, you must act as follows:

1. Obtain from the beneficiary his Zahav number (IBAN). The IBAN is an international code that is used for identifying bank accounts. It is comprised, inter alia, of the bank code, the branch number and the customer's account number. Part of the banks present the Zahav number in the account printouts that are sent to the customer and also enable the customer to obtain this number by the Internet, by phone or by ATM.

2. Contact the bank in which your shekel account is managed. Ask to carry out a transfer in the Zahav system (This is usually also available as an online service).

The operation involves a commission fee, which is determined by each bank. For information on the commission fee, contact the bank from which the transfer is to be made.

The Bank of Israel is "the banker of the banks", meaning that the banks manage their accounts at it. The Bank of Israel's interest as a central bank is to maintain financial stability and to minimize risks in the payment and settlement system. There for, a critical system as Zahav - should be operated by the central bank. This is accepted practice in other countries as well. The Bank of Israel initiated the process, which brought Israel into line with the developed countries in the area of payment and settlement.

Settlement in the Zahav system is carried out throughout the working day in real time. Each payment instruction entering the system is settled separately, without offset between the sender bank's debit and credit movements. When the instruction from the customer is received, the branch of his bank sends a payment instruction to the bank's center, from where it is sent directly to the Zahav system which is located in the Bank of Israel's premises in Jerusalem. If the sender bank has an adequate balance in its account at the Bank of Israel, the settlement operation is carried out immediately: The system debits the account of the sender bank, and credits the account of the recipient bank. Once the transaction is complete, confirmation messages are sent to both banks, and the recipient bank credits the beneficiary's account.

This page was last updated on: 09/08/2023