A monetary program to increase the liquidity of the financial system and support growth

24.12.2008
 
A monetary program to increase the liquidity of the financial system and support growth
 
The Bank of Israel announces the following steps to increase the liquidity of the financial system:
 
1.     From January 2009 the Bank of Israel will reduce the absorption of surplus liquidity that it carries out via the issue of makam (short-term bills issued by the Bank).
2.     In addition to the one-day and one-week monetary loans and deposits currently offered through auctions to the banking system, the Bank of Israel will offer longer term loans and deposits.
3.     The interest spread between the credit window and the deposit window for commercial banks will be reduced from ± 1 percentage points around the Bank of Israel interest rate to ± 0.5 percentage points.
4.     Repo auctions for the commercial banks and institutions will be offered for longer than the current period of one week.
 
These measures are expected to increase the liquidity available to financial institutions, businesses and households, and to reduce its cost.
The Bank of Israel will monitor the effects of these steps, and will examine other instruments as necessary.