Kahlon outlines financial reform plan

Former Likud minister says 0 VAT plan will not help housing prices.

By
November 13, 2014 17:28
1 minute read.
Moshe Kahlon

Moshe Kahlon. (photo credit: REUTERS)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

Once and probable future politician Moshe Kahlon, best known for spearheading the reform that crushed high prices in the mobile phone sector, laid out a vision for banking reform on Thursday.

The government needed to spur competition in finance to help get credit flowing to small and medium businesses, the former Likud MK and communications minister said, speaking at a commercial event at the Azrieli Center in Tel Aviv for Drinka, an office beverage company, and Yazamco, a printer company.

Be the first to know - Join our Facebook page.


While small and medium businesses account for most jobs, most of the money in the economy is geared toward the top of the food chain, he said.

“As long as there is not competition, this situation will not change,” Kahlon said.

Indeed, the Bank of Israel has noted that Israel does not have enough financial institutions to produce meaningful competition.

Former Bank of Israel Gov. Stanley Fischer said he tried in vain to convince large foreign banks to enter the market. Five big banks dominate it, and just a handful of companies deal with pensions and insurance.

The way to introduce competition, Kahlon offered, was for the government to issue 10 tenders for small or regional banks.

JPOST VIDEOS THAT MIGHT INTEREST YOU:


The banks would be required to lend to small and medium businesses, and in exchange would receive NIS 1 billion in loan guarantees from the state.

Since banks can lend out about 10 times the level of assets on their books, he argued, 10 banks with NIS 1b. each would pour NIS 100b into small businesses.

Similarly, the Bank of Israel’s supervisor of banks would not be limited to regulating the sector for stability, but also have to enforce competition, as regulators in Switzerland, the UK and Germany do.

Asked by The Jerusalem Post why he chose to focus on banking when the high cost of housing and food were priorities for many Israelis, Kahlon said he had reforms in mind for those sectors as well, but had been asked to speak about finance.

He dismissed Finance Minister Yair Lapid’s embattled 0 VAT plan as ineffective. “It does not deal with supply,” Kahlon said simply, echoing the most salient criticism of the housing bill voiced by the Bank of Israel and Finance Ministry professional staff.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS