be inadvisable to opt at this stage for simpler, “ instant ” solutions, such as imposing wide - ranging supervision over bank fees, or forbidding banks to charge fees at all. we must give the new system time to operate properly, and to allow the banking supervision department to deal with flaws that may come to light. supervision must be the last step, not the first, and even then only if there is absolutely no alternative. sweeping supervision is not advisable, is unacceptable around the world, will take us back to somewhere we do not want to be, and is likely to have an adverse effect on competition which we all favor so highly, and thus, in the final analysis, on consumers. this would probably occur because supervision is likely to result in the banks setting uniform fees, at the exact level determined, and the quality of service to customers would be impaired. moreover, and certainly no less important, it would probably deter potential competitors, particularly foreign banks, from entering the field of banking in israel, meaning that competition would remain at its low level. clearly we must give the reform a chance ; it has been in effect just two weeks. it is also important that we all support the supervisor of banks in advancing the reform, and he, on his part, will do what is necessary to correct any flaws and to speed up the whole process.

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