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Latest Negative Rate Experiment Comes With a New Twist in Israel

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The Bank of Israel is going a step beyond the European Central Bank with new targeted loans at negative interest rates that come with strings attached.

While the Israel central bank’s benchmark rate remains just above zero, the monetary committee last week rolled out special loans for banks, provided they’re used to extend credit to small and micro businesses. Unlike a similar program operated by the ECB, the Bank of Israel is capping the rate that banks can charge the borrowers.