This is the second year in which the Bank of Israel is publishing the Statistical Bulletin.  This publication is intended to provide the public with easy and friendly access to the main data and aggregates regarding financial activity in Israel, together with information and explanations about the data, definitions and calculations.  The data and aggregates in this publication are gathered and processed at the Bank of Israel, mostly in the Information and Statistics Department, as part of the management of information and statistics on economic activity, and serve the Bank in realizing its objectives and fulfilling its roles in accordance with the Bank of Israel Law.
 
Part one of the bulletin reviews the main developments in 2015 regarding four main topics in Israel’s financial statistics: the public’s financial assets portfolio; private sector debt; Israel’s economic activity vis-à-vis abroad; and foreign exchange activity of the principal sectors.  The main developments are outlined using graphs with short text segments alongside them.  The graphs show long-term trends of the most important data on each topic.  In addition, tables with selected indicators and data, as well as definitions and explanations of the main terms, are attached.
 
Part two of the bulletin presents two studies in the field of statistical methodology, and explanations of the data processing method in the following topics: the credit information system in Israel, and measuring the monetary aggregates in Israel according to the international standard.
 
The full publication (in Hebrew) can be accessed on the Bank of Israel’s website, including—for the convenience of users—the main data on each topic, in separate files, as well as links to regularly updated data on the Bank’s website.  The English version of the bulletin will be published in the near future.
 
The following are the main developments presented in the first part of the Statistical Bulletin for 2015, as well as abstracts of the two studies presented in the second part.
 
The main developments, presented in the first part of the Statistical Bulletin for 2015
 
A.    The public’s financial assets portfolio
 
·     In 2015, the increase in the balance of the public’s financial assets portfolio continued, further to its upward trend since 2012.  Despite this, the portfolio as a share of GDP declined during the year, for the first time since 2011.
·     About half of the contribution to the increase in the portfolio in 2015 came from an increase in the cash and current account components.
·     The downward trend in the share of the portfolio managed directly by the public (including mutual funds) continues, in parallel to the increase in the share of the portfolio managed by institutional investors.
·     Against the background of the decline in the interest rate in the first quarter of 2015, and further to 2014, there was a high level of net withdrawals from money market funds and from funds specializing in bonds.
·     The balance of assets managed by the institutional investors increased, but at a lower rate than the average of previous years.  In addition, some of the institutional investors increased their holdings of foreign assets as a share of total investment assets, though at a lower rate than in previous years.
 
B.     Private sector debt
 
·     Outstanding private sector debt continued to increase in 2015, at a rate similar to the rate of the previous year (3.2 percent).  The increase was mainly the result of a quantitative increase in debt, while the price effect (the Consumer Price Index and the exchange rate) was negligible.
·     Outstanding business sector debt increased by about 1 percent in 2015, similar to the rate in the previous year.  Since 2008, the annual rate of increase of business sector debt has been lower than the annual rate of increase of GDP, which is reflected a decline in the business sector debt to GDP ratio.
·     In contrast to the previous two years, there was an increase in bank debt in 2015, by about 3 percent, after the business sector quantitatively increased loans from banks during the year, in contrast to the quantitative reduction in such loans in the previous three years.  In contrast, the rate of increase of nonbank debt declined during the year.
·     In 2015, the increase in outstanding household debt increased at a rate similar to 2014 (6.7 percent).  The rate of increase of nonhousing debt during the year (7.5 percent) is higher than the increase in housing debt (6.3 percent).
·     Most of the nonhousing household debt is owed to banks, but there was a more rapid increase in debt to institutional investors (35 percent) and to credit card companies (18 percent), further to the trend of the previous year.
 
C.    Economic activity vis-à-vis abroad
 
·     In 2015, the flow of investments abroad by Israeli residents continued.  Financial investments by households and by institutional investors continued, and there was a marked increase in direct investments abroad by Israeli residents.
·     There was also an increase in the balance of investments in Israel by nonresidents in 2015.  The trend of financial and direct investments in Israel, partially offset by realizations of other investments by nonresidents, continued.
·     The strong fluctuations in securities prices both in Israel and around the world in the second half of the year reduced the balance of investments abroad by Israeli residents, while increasing the balance of investments in Israel by nonresidents.
·     In 2015, there was a return to the downward trend in the external debt to GDP ratio, as a result of an increase in GDP with a decline in the outstanding gross external debt to abroad.
 
D.    Foreign exchange activity of the principal sectors
 
·     In 2015, the high level of risk in the foreign exchange markets in Israel and abroad relative to the previous four years was maintained, following an increase from mid-2014.
·     In August 2015, there was a change in the shekel/dollar exchange rate, as the shekel transitioned from appreciation to depreciation, such that for the year as a whole the shekel appreciated only slightly against the dollar, but there was a marked appreciation (7.3 percent) in terms of the nominal effective exchange rate.
·     During 2015, nonresidents transitioned from exposure to appreciation of the shekel to exposure to depreciation of the shekel, in contrast to the prolonged increase in their exposure to a depreciation of the shekel since the end of 2012.  In contrast, during 2015 as a whole, there was in increase in institutional investors’ exposure to an appreciation of the shekel.
 
 
Abstracts of the two studies presented in the Part Two of the Statistical Bulletin for 2015
 
A.    The credit information system in Israel
 
The Information and Statistics Department at the Bank of Israel manages a database on activity in the credit market, and calculates aggregates of credit volume in various cross-sections of the economy.  The data are important mainly for setting the Bank’s monetary policy and for monitoring and analyzing financial stability.  Series of credit aggregates are published on the Bank of Israel’s website, and are very useful for economists and analysts keeping track of financial activity in the economy.
The study presents various breakdowns of the credit aggregates in the economy, such as by borrower sectors, lender sectors, types of credit instruments, and balances and transactions, as well as how they are calculated.  The study includes a description of the data framework and definitions, with a numeric sample of the who-to-whom matrix, details of the data sources, and a description of the main implementation and processing measures.
 
B.     Measuring the monetary aggregates in Israel according to the international standard
 
Following Israel’s accession to the Organization for Economic Cooperation and Development (OECD), the Information and Statistics Department adjusted the definitions and calculation of the monetary aggregates in Israel to the international definitions set out by the International Monetary Fund (IMF).  The main aggregate for measuring the quantity of money—the “broad money” aggregate—includes the most liquid monetary components, such as cash and demand deposits, but also includes other, less liquid, instruments such as makam (short-term loans).  The main difference between the broadest aggregate calculated thus far in Israel—M3—and the broad money aggregate is due to the development of new instruments and issuers in recent decades that were not taken into account in the previous definitions, such as money market funds.
 
Since the transition to the inflation targeting regime in managing monetary policy in Israel and in many countries around the world, the monetary aggregates no longer serve a main role in setting monetary policy.  Despite this, policy makers examine many indicators in order to assess the policy required to achieve the inflation target, including the development of the monetary aggregates, as an additional source of information on the state of the economy.
 

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