Following the success of the Bachar reforms, the Finance Ministry and the Bank of Israel announced on Thursday that they are embarking on a joint initiative to further modernize the local capital market in an effort to boost competition and efficiency and make it more attractive to foreign investment. "We believe that the Israeli capital market has potential for further development," said Finance Minister Ronnie Bar-On and Governor of the Bank of Israel Prof. Stanley Fischer in a joint statement. "The Israeli economy has great human capital characterized by high quality innovation and entrepreneurship. High standards need to also be established in the Israeli capital market by developing and exporting financial services, turning it to another growth engine for the economy." The reforms established by the Bachar committee require the country's banks to sell their asset management businesses in a move aimed at bringing new players into the market and reducing conflicts of interest. Fischer and Bar-On established an 11-member committee, chaired by the Finance Ministry's director general Yarom Ariav, in order to further increase the effectiveness of the reforms. The Ariav committee, which includes Supervisor of Banks, Rony Hizkiyahu; the Supervisor on Insurance and Savings, Yadin Antebi; the Israel Securities Authority Chairman, Moshe Terry and the deputy governor of the Bank of Israel, Prof. Zvi Eckstein, will submit its recommendations for attracting greater foreign capital and for developing the local market into more of a competitive global player by the end of August 2008. "The Israeli capital market is still characterized by high levels of concentration in various segments such as the financial brokerage system, and there is a need for development of the money market and its sophistications. Matters which have not been addressed by previous [reform] committees," said Bar-On and Fischer in the letter to the Ariav committee. "We are appointing you to examine and recommend the necessary steps to develop the capital market and make it more attractive to foreign capital." Some experts have argued that although the Bachar reform has been a great success, it has failed to take care of, or to reform the distribution channel of financial products, which were still 95 percent-channeled through the banks. The banks charge a so-called distribution fee that is paid by mutual fund managers. Back in July, the three financial supervisory bodies (The Bank of Israel, the Finance Ministry and the Securities Authority) united to maximize coordination between the regulatory agencies in an effort to improve the quality of supervision in a diversifying financial market following the Bachar reforms and to conform to international standards of best practice. As part of the initiative, a commission with Antebi, Hizkiyahu and Terry was established to meet at least once a month to discuss changes and trends in the financial markets.