In many economies around the world, there are two common types of financial products based on benchmark interest rates: (1) Deposits, loans, and mobile nominal interest bonds to various periods; and (2) interest rate derivatives. In Israel, unlike many other advanced economies, activity is currently conducted mainly in the assets themselves, and not through derivatives.
Macroprudential policy can help to manage the movements in credit so as to ensure that macroeconomic booms and busts are not excessively volatile. Our assessment of financial stability risks is more nuanced than debt levels per se. We look at the distribution of debt as well as its growth rate, and the sustainability of the asset values it is attached to.