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Bank of Israel response to Moody's report
The Bank of Israel explains that most of the factors noted in the notification by Moody's—and which led, according to the ratings agency, to reducing its credit rating outlook for Israel's banking sector—are known, and have even been noted by the Bank of Israel on various occasions in the past as risk factors and challenges facing Israel's banking system. In effect, Moody's referred in its notification both to factors in the economic and geopolitical environment in which the banking system operates, and to features of the banking system itself, particularly capital ratios of the banks and credit concentration. Stress tests conducted recently by the Banking Supervision Department together with the IMF took into account the factors noted above.
The Bank of Israel emphasizes that based on results of the stress tests and on the determined supervision of the banking system by the Bank of Israel, we believe that Israel's banking system is robust, and that it can withstand shocks as it has in the past. Among the factors contributing to the resilience of the system are the low debt ratios of households and the business sector in Israel, a relatively low leverage level for Israel's banking system, and minimal exposure to sovereign debts of European countries in crisis.