such unacceptable behavior. we should also remember, that in most of the cases, we are referring only to a suspicion and it is not clear what the final outcome will be. in the past, we have seen many cases of suspicion that in the end came to nothing. and what is the most important challenge facing the israeli economy today? it is the challenge to maintain this growth drive and to translate it into what we term " sustainable growth. " and what is the most important topic on this agenda? first, macroeconomic policy, i. e. budget policy and interest rate policy, which i noted earlier and the importance of which, i hope, the general public understands. and secondly, further to policy, is the need to continue with reforms. here i would like to expand on reforms in the israeli economy. the panel before me spoke about one of the most important reforms in recent years, the reform of the capital market. there were other important reforms, such as the reforms of the ports, and personal income tax. in this context, i would like to present an initial list that we at the bank propose to put forward. and more so, the bank's research department is working to draft proposals for these reforms. specifically our list includes : 1. in the labor and welfare fields : here we return to a subject we have proposed, and which we are working on together with the prime minister's office and the ministry of finance : that of negative income tax ( " earned income tax credit " ). other topics in hand are the increase in incentives to go to work, inter alia, through helping improve work support services, foremost of which is childcare, and strengthening the wisconsin plan along such lines that are currently being discussed. that is tightening the link between incentives for participating companies and absorbing the individuals into the labor force in general, and ensuring quality placements for the workers in particular, as well as adjusting the program to the needs of the various population groups. 2. in education : it is important that a reform of the higher education system, along with the primary and secondary systems, is examined. concerning higher education, the whole issue of funding must be dealt with. fortunately, a new committee has been set up headed by former minister of finance, beiga shochat, to seriously tackle the field of higher education, and the bank of israel is involved in two sub - committees on this matter. as for primary and secondary schooling, one must find ways to increase the

loans are made in good times. ” this is an important thing to say at any time but particularly at the present time, in view of expectations of a growth slowdown in the global economy and, especially, the us economy, in 2008. on this point, an important aspect is the process in which the banks are currently engaged, with the support of the supervisor of banks – of raising the capital ratio. this process should be followed through to its completion. before i turn to the subject of competition in the banking system, i would like to emphasize one especially important point. the banks have recently been subjected to a wave of attacks in the name of competition and customers ’ wellbeing, and i too have leveled criticism with regard to one aspect, and that is bank fees. sometimes the banks themselves take steps that seem to invite such attacks, but we must be extremely careful. a strong and stable banking system, as i have already stated, is vital to the robustness of the economy, and we must not weaken it. although nearly all proposed legislation regarding banks purports to protect depositors, in certain cases it would harm the banks and the desire of other entities to act as competitors to the banks, and in the final analysis, the depositors themselves. it is thus essential that any initiative concerning the banking system be undertaken in full cooperation with the banking supervision. 3. competition in the banking system competition in the banking system has been a focus of attention in the bank of israel and among the public for many years. there is a reasonable degree of competition in the area of banking services for the business sector, and the bachar committee dealt with competition in the credit and capital markets. this year bank fees were the focus of a great deal of attention. the banking supervision department was deeply involved in the subject this year. firstly, the supervisor of banks, together with the knesset economics committee, successfully promoted the bank fees law. following that, the banking supervision department, after investing a great deal of effort, drew up a new schedule of bank fees for households and small businesses. the new schedule is standard for all banks, and contains 68 fees, still not a small number, but significantly fewer than the 198 fees currently listed. the new schedule will make it easier for customers to know how much they will have to pay, and for what. this enables customers to compare the fees charged by the different banks, and to decide which offers the cheapest rates for which services. we hope that