Credit window interest rate: 4.25%
Deposit and/or loan tenders to banks
Monetary deposit and loan tenders are the main policy tool for attaining the interest rate level that has been set. In accordance with liquidity needs, the Bank of Israel offers that banks make deposits with it for terms of one day, one week, or a liquidity period, or take loans from the Bank of Israel for set periods of one day or one week. Against these loans, the banks provide the Bank of Israel will collateral, including government bonds and Makam.
The monetary tender is a graduated tender on the interest rate. In a tender on loans, the lowest interest rate is the Bank of Israel rate, and in a tender on deposits, the maximum interest rate is the Bank of Israel rate. Demand is on interest rate spreads of basis points (hundredths of a percent), and the amount of each bank’s orders separate cannot exceed the amount of the loan or deposit offered in the entire tender.
In the past decade, there have been high liquidity surpluses in the banking system, so the regular tenders conducted by the Bank of Israel are for deposits of various ranges, through which the Bank of Israel absorbs the liquidity at the volume required to attain the set interest rate level.
Long-term loan program: In response to the COVID-19 crisis, the Bank of Israel Monetary Committee decided upon a special program of long-term loans. As part of the program, the Bank of Israel issued loans in a number of tranches for periods of 3 or 4 years at interest rates of 0.1 percent or -0.1 percent, on condition that the banking corporations provide credit to small and micro businesses. A total of NIS 40 billion in loans was issued as part of the program, and the program ended in July 2021.