Bank of Israel report: the economy in Israel is stable, but...

Contrary to the alarmed media reports, this morning, the financial stability report for the first half of 2023 was published by the Bank of Israel, which presents a picture of stability of the local financial system, despite the opposition of judicial reform opponents.

In the stability report of the Bank of Israel published twice a year, the bank's economists express their assessment regarding the exposures to the main risks faced by the financial system, analyze the main exposures and evaluate potential risk scenarios.

The protest and the legislative changes are risk factors for the economy

The main findings of the report indicate that the financial system is stable, contributed by the resilience and stability of the banking system and insurance companies, as well as the proper functioning of financial infrastructures. The security cushions accumulated by households and corporations, among other factors due to incentives and relief measures provided during the COVID-19 periods, have enhanced their resilience against potential shocks.

However, the report warns about "the implications of changes in legislation regarding Israel's judicial system on the functioning of the economy and the financial system as a whole." Another concern raised by economists is the slowdown in economic growth in Israel and globally, alongside difficulties in the global banking system. If these processes intensify, they may challenge the stability of the system in the medium term.