Israel Offered Membership of the Bank for International Settlement
(Communicated by the Bank of Israel Spokesman)

June 30, 2003

The Bank for International Settlement (BIS), whose head office is in Basel, Switzerland, today announced its decision to invite the Bank of Israel to become a member of the BIS, together with a number of other countries. The decision was notified to the Governor of the Bank of Israel, Dr. David Klein, who is in Basel for the Annual General Meeting of the BIS. The decision to join the BIS requires the approval of the Israeli government.

The BIS is the oldest international financial organization. It was founded in Basel in 1930 as part of the Hague Convention, and currently about fifty central banks are members. The aims of the BIS are to promote monetary and financial cooperation between central banks, and its activities have widespread influence that extends to non-member countries too.

The Bank of Israel has had observer status at the BIS for several years, in the course of which numerous professional contacts and ties of cooperation were established. The invitation to Israel to join the BIS reflects appreciation of the level of Israel’s economic development and its ability to contribute as a member in promoting the financial and banking issues dealt with by the BIS. Israel’s participation is a milestone along the path of the development of its financial markets, and is evidence of the advances made in these spheres over the last decade. By joining the BIS Israel is broadening its network of close contacts that it has had for years with important international financial institutions such as the International Monetary Fund (IMF), the World Bank, the Inter-American Development Bank (IADB) and the European Bank for Reconstruction and Development (EBRD). These relations constitute an integral part of the government’s policy to realize the economy’s full growth potential while fostering Israel’s integration into the international markets.

The activities of the BIS in promoting cooperation between central banks include:

  • Developing international standards for banking supervision. This is carried out by the Basel Committee on Banking Supervision, established in 1974. Its recommendations regarding capital adequacy (The Capital Accord, 1988) and its Core Principles for Effective Banking Supervision (1997) are among its better known publications in the last few years.
  • Monitoring the situation of the international financial system and making recommendations to improve its stability. This aspect of BIS activity relates to the systems for inter-bank payments within and between countries, with the aim of improving the flow of information and cooperation between countries and international organizations (such as the IMF, the World Bank and the OECD) regarding the stability of the international financial system. The BIS also monitors foreign currency markets throughout the world. The Bank of Israel together with the banking system in Israel has started to upgrade Israel’s payment and settlement systems in accordance with the international norms determined by the BIS.
  • Provision of banking services to central banks in investing foreign exchange reserves, executing international loan agreements, as well as organizing emergency aid in cooperation with the IMF (e.g., the aid to Mexico in 1982 and to Brazil in 1998).
  • Helping various international bodies-such as the Financial Stability Forum and the International Association of Deposit Insurers-to fulfill their functions related to financial systems.