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	Israel		Info-Prod Country Guide
JUDICIARY   BUSINESS FORMS & STRUCTURES   CURRENCY & BANKING   INTELLECTUAL PROPERTY TAXATION   INVESTMENT & TRADE   ENVIRONMENTAL LAW

Currency and Banking Foreign Currency Control General Foreign currency control is administered by the Bank of Israel and affects transactions carried out by Israeli residents and non-residents. In recent years the laws governing foreign currency control have undergone several reforms to remove maof the restrictions imposed on Israeli residents investing abroad and on investments by non-residents in Israel. While the basic rule is that foreign currency transactions are prohibited unless authorization is obtained, many types of foreign currency transactions are allowed by virtue of the General Permit promulgated pursuant to the Currency Control Law of 1978. The General Permit authorizes Israeli and foreign residents to conduct certain transactions through an authorized dealer (usually an Israeli bank). The transactions authorized in the permit include most transactions conducted in the ordinary course of business activity. There are also several Class Permits which allow foreign currency transactions by persons or entities that meet certain class characteristics. A Special Permit may be required for any transaction outside the scope of the transactions covered by the General Permit or Class Permits. In granting such a Special Permit, the Controller of Foreign Exchange will generally examine the permit applicant's request to ascertain the benefits to be gained by the Israeli economy from allowing such a transaction. Israeli Residents Israeli residents are permitted to hold foreign currency accounts in Israeli banks using shekels to purchase the foreign currency. Individual, as well as corporate Israeli residents, may also borrow money from foreign sources and repay such loans in foreign currency provided that details of such loan is submitted to the Bank of Israel (usually through an authorized dealer). Individuals are permitted to invest in Israeli and foreign securities traded abroad on authorized foreign stock exchanges. Israeli active companies, companies that have annual revenues of at least US$ 450,000, are permitted to invest in the equity of, grant loans to foreign companies or acquire real estate abroad. Furthermore, Israeli companies are permitted to purchase securities on foreign stock exchanges. Non-Israeli Residents A foreign resident may repatriate profit from investments in Israel and transfer all proceeds resulting from the sale of such investment subject to the certification by the tax authorities that the relevant Israeli taxes have been paid. A foreign resident may invest in shares of Israeli companies and may grant loans to Israeli companies or individuals. Banking Israel has a highly developed and modern banking system. There are commercial banks, mortgage banks, financial institutions, merchant banks, representative offices of foreign banks and an investment finance bank. A full range of commercial services and support is provided by those banks, many of which maintain branches and offices in the major international financial centers. Approximately 75 percent of the total assets of the commercial banks is held by three major banking groups (Bank Hapoalim, Bank Leumi and Israel Discount Bank). In 1983, the Israeli banking industry went through what became known as the "bank share crisis." As a result, the Israeli government intervened and became a major non-voting shareholder of the leading banks. The government has sold controlling interests in several banks and is continuing the privatization process with respect to the remaining shares held by the government in more banks as well as with respect to the other banks. The Bank of Israel is the official central bank. Among its numerous responsibilities, the Bank of Israel is also responsible for the issuance of currency, monetary policy, and regulations. Previous Chapter Contents Menu Next Chapter

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