The Bank of Israel has decided to publish a periodic Financial Stability Report on the domestic financial system, as common among central banks in advanced economies.
This decision is anchored in the definition of the Bank of Israel’s role, according to the Bank of Israel Law, 5770–2010. The analysis in this report relates to events that took place until the end of June 2014. The domestic financial system has demonstrated impressive resilience both during the global financial crisis of 2008 and following it.
However, like other countries, there is a need in Israel as well to identify and assess the systemic risks faced by the financial system and to provide warnings of such risks, and the Financial Stability Report is intended to serve this purpose.
The focus on systemic risks developing in the financial system—meaning the risks that hold the potential to significantly impact real economic activity—reflects one of the main global lessons of the 2008 crisis, since that crisis emphasized the importance of strengthening the financial system’s ability to withstand shocks and to moderate the impact of such shocks on economic activity.
