Expanding Monetary Operations through Repurchase Agreements (repo)

8.2.2006
 
Expanding Monetary Operations through Repurchase Agreements (repo)
From March 2006, the Bank of Israel will expand its monetary policy through repo operations: The scope of operations will increase to NIS 500 million (face value), with terms shortened to one week and the auctions will be held at greater frequencies; they will be carried out once a week.
 
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From March 2006, the Bank of Israel is to expand its monetary policy through repo operations (repurchase agreements). This expansion of activity is part of the Bank of Israel's intention to implement its monetary policy through instruments based on tradable securities and to operate with the market as a whole, as is common practice among other central banks. The Bank of Israel's Monetary Department has sent a circular on the subject to all the banks and members of the Stock Exchange today, Wednesday February 8, 2006.
The Bank stresses that the further development of the repo operations in Israel will contribute to improving banks' liquidity and to an improvement in tradablity in the securities markets, making market-makers' operations more efficient.
These are the main changes that will be made in the repo transactions which the Bank of Israel conducts with the banking institutions and the members of the Tel Aviv Stock Exchange:
  The scope of the repurchase auctions will be increased to NIS 500 million, nominal value (up from the current NIS 200 million)
  The term of the agreements will be shortened to one week (instead of the current two week term)
  Frequency of the auctions will be increased to once a week (instead of once every two weeks).
The Bank points out that regular tenders for Makam certificates will continue twice a month, usually on the first and third Tuesday of each month.