Ministers support a law in which the governor of Israel bank will be able to determine the interest that banks will pay customers

The Ministerial Committee for Legislative Affairs has confirmed its support for a bill according to which the governor of the Bank of Israel will be able to determine the amount of interest that banks will pay to customers on positive balances in a checking account. According to the proposal, submitted by MK Yanon Azoulai (Shas), the governor will determine its rate after consultation with the advisory committee and with the approval of the Minister of Finance. The proposal will be put to a preliminary reading vote this Wednesday.
Today, Bank Leumi grants 1% interest on the balance of the right in checking accounts, and Bank of Jerusalem joined it today. Whereas in most banks, customers do not receive any interest on their money that is in transit.
The bill comes despite the opposition of the governor of the Bank of Israel, Prof. Amir Yaron, and despite his meeting with the CEOs of the banks last week. During his meeting with the bank managers, Yaron emphasized that the high profitability of the banking system in recent times stems, in part, from the extensive scope of checking accounts and that they do not bear interest and insufficient transmission of the interest on household deposits in the current interest rate environment - while on the lending side there is an almost complete transmission. These led to a very high return on the banks' capital, which is not sustainable in the long term. Also, the importance of formulating targeted solutions was emphasized For populations struggling financially in particular.
Even though Shiron gave the banks a week's extension to come back to him with an action plan, MK Azoulai rushed to submit the bill, which interferes deeply in the banking market, contrary to the governor's position.