Central Bank governor says question marks over Israel's financial stability
The 'intensity' of the conflict in Gaza 'puts a question mark' over whether the financial viability of Israel 'still remains secure', the Central Bank of Ireland governor has said.
The Central Bank of Ireland (CBI) insisted that it cannot 'impose sanctions' on Israel or stop facilitating the sale of so-called 'Israeli war bonds'.
It also said that it does not have to consider the Genocide Convention when reviewing or approving prospectuses.
The comments were made at the Finance Committee, which was held several hours before the Dáil was due to vote on selling the bonds for the second time in as many weeks.
The CBI is the designated authority for the sale of Israeli bonds in the EU.
It is responsible for assessing whether a prospectus is in compliance with the requirements of the EU Prospectus Regulation.
Gerry Cross, Director of Capital Markets and Funds at CBI, told TDs and senators at the Finance Committee that they must ensure that relevant information is included, such as 'does this disclose the things that an investor needs to know to understand their financial risks' before they invest.
Gabriel Makhlouf, Governor of the CBI, confirmed that Israel has yet to contact the bank about renewing the prospectus before it expires in September.
Labour's Ged Nash asked Mr Makhlouf the questions and issues the CBI would 'raise with the Israeli State' if they seek to renew the prospectus before it expires in September.
The Governor said that he would expect Israel to divulge that its war on Gaza is affecting its financial stability.
He said: 'I would expect [the prospectus] to set out any new developments that are relevant.
'It depends at the moment when they actually write to us, but I think the intensity of the conflict in Gaza probably does put a question mark over whether you know the financial viability of the [Israeli] State still remains secure.
'The fact that the European Union has indicated that it's going to look at its cooperation agreement with Israel, I think that's a factor.
'The fact that the Finance Minister [Bezalel Smotrich] has just been sanctioned by a number of countries, that may be a factor.
'We haven't drawn up a list of the things that we'd expect to see. But clearly, you'd expect, in view of what's happened in this conflict, some impact on the financial affairs of the State will be material.
'Now, in the end, it is for the [Israeli] State to make the judgment whether it does affect its financial standing or not.
'We don't make that assessment. I would expect them to address that.'
Mr Makhlouf said it is up to Israel to decide who they want to apply to another EU country to be the designated authority for the sale of bonds.
In his opening statement, Mr Makhlouf stated that CBI is 'established by law, we are empowered by law, and we must always act within and in line with the law'.
He said: 'One of the powers that has been assigned to us is to perform the functions of a competent authority under the European Prospectus Regulation.
'This means that we must approve a prospectus once certain conditions are met.'
He insisted that the CBI does not 'issue, sell, trade or list these bonds' and that it does not 'authorise or supervise them' in the case of Israeli sovereign bonds.
Mr Makhlouf continued: 'It is for international bodies such as the UN or the EU to determine how to respond to breaches or alleged breaches of international law, including to determine whether sanctions are necessary.
'The Central Bank cannot impose sanctions on Israel – for example, by refusing to approve the Israeli bond prospectus – in circumstances where the EU has not imposed any such sanctions itself.'
While he condemned the war in Gaza and the blocking of aid, Mr Makhlouf said the CBI must 'carry out the statutory tasks and functions which have been assigned to us'.
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