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Review of the Reference Rate in Israel: Telbor and Makam Markets


  • Roy Stein

    (Bank of Israel)


The reference rate markets are an important and central feature in capital markets around the world, through which it is possible to increase financing possibilities for the business sector and reduce exposure to the risks of unexpected changes in the interest rate. The Telbor market, a platform for setting reference rates for the short-term nominal interest rate in Israel, has developed markedly in the past decade—but only in the area of interest rate derivatives. These derivatives have matured greatly, even more than the widespread activity in foreign exchange derivatives. Due to the many manipulations of reference rates discovered worldwide—the Libor rates—it is interesting to examine the interest rate markets in Israel and their characteristics. Therefore, the research question dealt with in this study regards the structure of the markets, and its objective is to determine which of the two main interest rate markets in Israel—the Telbor market or the Makam (short-term nominal-interest central bank bills—up to a year) market—is the preferred platform for determining the reference rate. The study also examines the Telbor market in Israel as compared to the Libor market, and discusses as well the basic characteristics that are important for the efficient functioning of the reference rate market, delineating the many benefits in continuing the development of this market.

Suggested Citation

  • Roy Stein, 2016. "Review of the Reference Rate in Israel: Telbor and Makam Markets," Bank of Israel Working Papers 2016.12, Bank of Israel.
  • Handle: RePEc:boi:wpaper:2016.12

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    References listed on IDEAS

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