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Imposition of a Reserve Requirement on Foreign Exchange Derivative Transactions by Nonresidents
From January 27, 2011 banking corporations in Israel will have to meet a reserve requirement for foreign exchange derivative transactions by nonresidents.
The Bank of Israel today published an amendment to the Liquidity Directives that will become effective on January 27, 2011. The amendment imposes a reserve requirement on banking corporations for foreign exchange derivative transactions with nonresidents. A 10 percent reserve requirement will apply to NIS/foreign exchange swap transactions (FX Swaps) and NIS/foreign exchange forwards.
In the last few months the volume of foreign exchange derivative transactions by nonresidents has increased markedly. A significant part of the increase in nonresidents’ transactions is in short term instruments. This measure will strengthen the Bank of Israel's ability to achieve the objectives of its monetary, foreign exchange and financial stability policies.
This step is being implemented by the Bank of Israel in the framework of measures being considered by the Bank of Israel and by the Treasury in the field of foreign exchange.
The amendment to the Liquidity Directive is published on the Bank’s website (in Hebrew).
For the amendment in Hebrew - Click here