On December 22nd 2016 the Israeli Parliament passed The Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016 – allowing the establishment of credit unions in Israel for the first time in half a century. The bill was brought as a governmental initiative – after a five years struggle of social activists who were determined to promote the idea of cooperative financial institution and its implementation.
This all started with the social protest of 2011 which evoked the need for a major change in the highly centralized and very expensive banking system. OFEK cooperative society was established in 2012 setting a goal of starting a cooperative bank. During the five years since then, governmental committees have risen and faded and many statements have been made in favor of the idea only to collapse into concrete decisions that would prevent it.
The former Supervisor of the Bank of Israel decided to prefer "stability" over "competition" – announcing the regulation of financial cooperatives would require equity capital of 75 million NIS (about 18 million €) prior to licensing and after expenses – which meant that the cooperative must raise about 40 million € from members - an impossible mission.
It was only when a new Supervisor of Banks was appointed that the barriers were lifted - as she announced that small financial institutions present no threat to the stability of the market, and should be supported by enforcing as little regulation as possible, in order to encourage them to operate. A new challenge then began. This would be the first cooperative law ever enacted in Israel - the
Cooperative Societies Ordinance was promulgated by the British Mandate. The challenge was how to make sure that the new law would be based on cooperative values and principles.