The Bank of Israel has announced its decision to discontinue the use of the Telbor (Tel Aviv Inter-Bank Offered Rate) as the benchmark for setting interest rates. Instead, the central bank will transition to a new overnight interest rate mechanism by mid-2025.
Telbor has been a key reference rate for financial transactions in Israel for many years. However, concerns have been raised about its reliability and susceptibility to manipulation, prompting the need for a more robust and transparent benchmark.
The move to a new overnight interest rate is aimed at enhancing the efficiency and integrity of the financial system in Israel. The Bank of Israel believes that the new mechanism will better reflect market conditions and improve the accuracy of interest rate setting.
The transition process is expected to be completed by mid-2025, allowing market participants and financial institutions sufficient time to adjust to the new framework. The central bank will work closely with stakeholders to ensure a smooth and orderly transition.
This decision aligns with global trends towards phasing out interbank offered rates in favor of more reliable and representative benchmarks. The Bank of Israel's move reflects its commitment to maintaining a stable and transparent financial environment in the country.
Market participants are advised to stay informed about the upcoming changes and prepare for the transition to the new overnight interest rate mechanism. The Bank of Israel will provide further guidance and support to facilitate a seamless shift to the new benchmark.
