Finance Minister Smotrich Pushes Controversial Savings Reform Amid Market Opposition

On June 30, 2026, Israeli Finance Minister Bezalel Smotrich unveiled a major financial reform aimed at revolutionizing the savings market, presenting it as the biggest change in recent years. The reform, dubbed the "arbitrage reform," proposes consolidating various savings products into a unified investment account and extending tax benefits currently limited to certain savings plans to all products up to 200,000 shekels per saver. Smotrich emphasized that the reform would encourage the public to move funds from non-interest-bearing current accounts to more profitable investment channels.

However, the reform has sparked significant opposition from the capital market sector and the Capital Market Authority (CMA). Notably, the CMA Commissioner, Amit Gal, who was absent from the press conference due to illness but had actively opposed the reform during discussions, warned that the changes could reduce competition, limit product diversity, and increase costs. Gal argued that the reform overlooks the varied needs and preferences of savers, who benefit from a range of products tailored to different financial literacy levels and management styles. The CMA cautioned that the reform's regulatory and operational demands might disadvantage some products, potentially leading to fewer providers and higher prices.

Critics within the industry also criticized the reform process, claiming that some committee members were not shown the final report before its release and that the full reform details were not presented at the press event. Despite these concerns, Smotrich noted that the CMA's dissenting opinion was included in the committee's final report and that some recommendations were adjusted following their input. Nonetheless, the majority of stakeholders, including the Budget Department, Chief Economist, Securities Authority, and the Finance Ministry's CEO, supported the reform.

While the Finance Ministry views the reform as a necessary modernization to boost investment returns for savers, market participants see it as a solution to a non-existent problem that risks harming consumers and reducing market competition. The debate highlights a fundamental disagreement over the reform's impact on Israel's financial savings landscape and the best way to serve diverse saver needs moving forward.