A light flap for the banks, they are strong and robust

Barr told Calcalist that “Instead of telling bank executives to close frames, manage risk, strengthen capital, we told them ‘you can give credit lines to good and strong businesses and let them go through two quarters because you are solid.’ NIS 4 billion guarantees and we are already seeing the banks go out with slogans for business “we are with you” and so will be. ” Bar believes that the stock market is exaggerating the bank’s shares exaggerated: “There is an over shooting here that is affected, among other things, by the fact that the US banks are also declining sharply and this creates a sticking element.”

Bar added that “even if the scenario is breached against what we estimate today, the system is still very stable and this is a minor blow to the wing. The Bank of Israel is in regular contact with the Treasury and the Prime Minister and is working on additional tools if needed. NIS billion is significant when the country’s credit for small and medium-sized businesses provided NIS 6.8 billion in credit in the last four years, so that for two quarters of credit, NIS 4 billion is a very nice amount. “

Barr noted that interest rates are less relevant at this point: “This is not a monetary event, but a realistic event. It is not 2008, the interest rate is less effective. What is needed is to give the business air to breathe.” Regarding the fear that the event will trickle into large, leveraged businesses as well, as is already evident in Isaac Tshuva’s fuel group, Barr said: “Banking exposures to large borrowers are really limited and I have no fear even if one big borrower gets in trouble nothing will happen and it won’t affect banks thanks to the change Of the last decade and decreased exposure to large borrowers, due to pressure we exerted on reducing exposures. We sat on the large exposures of all banks and I am not troubled, neither at the system level nor at the individual bank level. “

The Governor made it clear that the Bank of Israel has a variety of tools to support economic and financial activity in the economy. He added that monetary policy continues to be expanding, thus supporting economic activity. Among other things, Yaron appointed a special team, headed by Deputy Governor Andrew Abir, to integrate the Bank’s activities and liaison with other authorities around the crisis. The team closely monitors the spread of the virus in the world and in the country, the developments in the economy and the global financial system, and their implications for the banking system in Israel, the local financial markets and the economy as a whole.

According to estimates, in line with developments so far and assuming the event ends by the end of the second quarter, the crisis is expected to hit about 0.7 percent of GDP growth this year, according to the Bank of Israel Research Division. When the spread of the virus is halted, the return of the product is expected to prevail before the crisis, and this will be reflected in a temporary acceleration in growth. The pace of recovery will be affected by the policy measures taken during the crisis to mitigate its damage.

However, the Bank of Israel acknowledges that this is a rolling event, and there is great uncertainty regarding the continued spread of the virus and its implications in terms of economic activity in the world and in Israel, which could also affect the magnitude of the damage to the economy. The uncertainty is due to three factors: the duration of the event, the magnitude of the spread of the virus in other countries, as well as the extent of the spread of the virus in Israel, the magnitude of the preventive measures for the spread of the virus to be taken in various countries and in Israel, and the economic impact of these measures.

After this assessment, the Governor explained that “at this time, our job at the Bank of Israel is to help achieve the right balance in the financial system. It is essential that banks know the balance between credit policy and the financing needs of the economy – especially the business sector and the emphasis on small and medium businesses -. The ability of the economy to continue to grow and is based mainly on bank credit. “

The Governor made it clear to the bank CEOs that “If each bank tightens its credit policy significantly, the economy will grow more slowly – which will justify a stringent credit policy that banks have adopted and become a self-fulfilling prophecy. Conversely, if every bank and other banks in the system ease even slightly in their credit policies, it will help overcome the cash flow difficulties that may thwart businesses with healthy economic activity and the economy will succeed in the interim period and grow faster – which will justify the banks’ policies.

The Governor added that “the Treasury, in coordination with the Bank of Israel, will assist, among other things, through the dedicated Small and Medium Business Fund launched yesterday. These solutions will help the various businesses deal with the situation in the interim period, based on the business considerations of the banks.”