Stanley Fischer 311 R.
(photo credit: REUTERS/Baz Ratner)
Banks supervision must be tightened to safeguard against potential future damage
to the banking system, Bank of Israel Governor Stanley Fischer told the Knesset
Finance Committee Wednesday.
The committee was discussing an amendment to
the Marani Law in the Banking Ordinance, which aims to resolve the issue of who
controls a commercial bank without a controlling share. Fischer said the bill
would protect against scenarios in which an individual or group gains control of
a bank through its directorate, without receiving the central bank’s
“We must prepare for the day in which there will be banks with
no controlling core,” he said, adding: “The collapse of a big bank will cause
great damage by forcing massive expenditure, therefore everything must be done
to prevent such a situation.
“Until [the global financial crisis of] 2007
to 2008 we thought this was only a theoretical discussion, but after what
happened in the United States and in Europe we were proven
Fischer reiterated comments he made in a press conference on
Tuesday that the Israeli economy was not at risk of a recession, but a crisis in
Europe would still have a damaging effect on Israel – both at the financial and
“If European banks crash, that will affect us too,”
he said. “The financial climate will be a lot worse, and we’ll be a lot less
optimistic. It could happen.”