Questions and Answers
Only loan certificates included on the list available on the Bank of Israel website can be redeemed, and under the following conditions:
- The certificate must be presented.
- The redemption is carried out with the registered owner only, or via a transfer form certified by a banking corporation. A transfer letter from abroad needs to be certified by a commercial bank, trust company, a New York Stock Exchange-traded company, Israel Bonds, an Israeli Consul, or savings banks listed in the manual "Directives for Redeeming Foreign Loans in Israel" which was distributed to banking corporations.
- Only to 7th series bonds can be redeemed early, and only in cases with one of the conditions for early redemption. The most common conditions are listed on the certificates.
Information needed to calculate the certificate's payment value, and information about the certificate—such as if it is ineligible for redemption
A resident of Israel can present for early redemption bonds of up to $1,000 par value per calendar year. Tourists visiting Israel are eligible to present for early redemption $2,500 par value for each calendar month of their visit, to defray their expenses in Israel.
A public institution, recognized under Section 46(a) of the Income Tax Ordinance, is eligible to present for early redemption certificates received as a donation, provided that they were issued more than three years before the redemption, and provided that notice of the early redemption was given 120 days before the redemption.
Early redemptions will only be paid in shekels.
The conditions for early redemption of bonds from the 7th series are listed in the "Directives for Redeeming Foreign Loans in Israel" which was distributed to banking corporations
No. Regular bond certificates can be redeemed through most main city branches of commercial banks.
State of Israel certificates with a par value of $100 may be redeemed through three banking corporations without a fee - Discount Bank, First International Bank, and Union Bank; and in other banking corporations with a fee.
The fee is up to one percent of the amount payable, except for State of Israel certificates with a $100 par value, on redemption of which the fee charged is $2 per certificate, which is paid to the redeeming bank by the Bank of Israel.
In general, the global crisis is expected to significantly moderate the rate of price increases during the coming year or two. The moderating effect on price indices in the near future will be relatively weak but will strengthen over time.
The main factors expected to moderate inflation are the decline in global energy and food prices, which has already occurred to a large extent, and the expected drop in domestic demand. The drop in global energy and food prices is acting to moderate the increase in the cost of production and thus reinforces the moderation of price increases. The drop in the value of the public's financial assets (the prices of shares and bonds and at a later stage perhaps the price of housing) is acting to reduce the demand for private consumption and a decrease is expected in the demand for exports and perhaps investment.
An additional factor that is expected to moderate demand (primarily investment by firms) is the fear of bankruptcy which is manifested in, among other things, the difficulty encountered by some firms in obtaining credit. This could lead to a reduction in investment and production, a decline in the demand for labor leading to an increase in unemployment and a lower rate of increase in wages, which in turn will also affect the demand for consumption
From a system-wide perspective, the banks are currently enjoying greater stability and are more able to absorb shocks than in any previous period. Furthermore, the banks in Israel are being managed with greater caution and are expanding their liquidity reserves. The damage to the banking system in Israel so far has not been significant from this perspective.
The Bank of Israel is working continuously to strengthen the stability of the banking system. Apart from the ongoing and routine activities that are meant to strengthen the banks' systems of control, management and auditing, the Bank of Israel has endeavored to increase the banks' capital base significantly during the past two years, with the goal of creating a cushion against unexpected losses and events such as financial crises.
With respect to the current global crisis, the Bank of Israel is assessing the situation of each bank on an ongoing basis, as well as that of the banking system as a whole, using a data and information which the banks are required to provide on an expanded scale. The Bank of Israel instructs the banks as to the measures required of them, both regarding the system as a whole and specific banks, and closely monitors the banks' activities and preparedness. In addition, the Bank of Israel maintains ongoing contact with the Ministry of Finance and the Israel Securities Authority in order to obtain an overall picture of the situation, ensure coordination and decide on policies and measures to be implemented in the future.
The Bank is assessing a wide variety of scenarios, ranging from the most pessimistic to the most optimistic, and future plans of action have been decided on in order to ensure that the financial system will continue to function and that depositors will not be hurt.
There is no concern for the stability of any banking institutions in Israel.