The Bank of Israel on Monday launched the so-called real-time gross settlement system, or RTGS, a same-day clearing system for bank transfers, as part of the central bank's overall reform in the payment and clearing system in Israel. "The application of the new system will guarantee rapid and reliable performance of payments, significantly reduce credit risks associated with carrying out payments and enable banks to better manage and monitor their levels of liquidity," said Ronit Chitayate, head of payments and clearance at the Bank of Israel. "The implementation of the system brings Israel's payment system in line with international standards and as such eases doing business in Israel, in particular for foreign investors." Chitayate added, however, that the system was not able to foresee or avert the collapse of a bank. The new system called "Zahav," makes it possible to clear inter-bank payments and settle large payments between individuals and firms in real-time - that is within minutes throughout the day. The transaction denominated in shekels is immediate and final with no possibility of canceling the transaction at a later time. There is no minimum or maximum amount and each transfer will be settled individually. The establishment of the Zahav system assures rapid and reliable performance of payments and will lower the risks in existing clearinghouses, bring them up to international standards and enable them to work with the new system. The launch of the new system was executed in two stages. In the first stage, the banks implemented the RTGS system on July 30 and, in the second stage, the system was made available for use to the public as a whole from September 3. Since the end of July, about NIS 4.9 billion a day have been transferred through the Zahav clearance system, or about 8 percent of all inter-bank transfers. Average inter-bank transfers executed since the launch amounted to NIS 209 million. "The swift clearing system is expected to be used for making large transactions executed by big companies and trading rooms," said Chitayate. "The private bank customer might make use of the service for big one-time payments such as the purchase of a car or an apartment. For smaller amounts, it might not be economically viable to use the service." Bank Hapoalim is charging a fee of NIS 65 for Zahav bank-to-bank transfers, compared with an average of NIS 40 charged for inter-bank transfers under the old system, which take at least one day to clear. The same-day clearance system includes the check clearinghouse, the automatic clearinghouse, which performs standing orders and direct credits/debits, the Stock Exchange clearinghouse and the central-bank systems, which perform the final clearing function for all inter-bank activity in the banks' accounts with the central bank. Along with the launch of RTGS System, the Bank of Israel also will introduce the International Bank Account Numbers (IBAN) standards in the market from this date. Any cash payment designated to a beneficiary (which is not a financial institution), must include the IBAN of the beneficiary. Without an IBAN, the instruction cannot be processed through RTGS System.