JERUSALEM, Feb 14 (Reuters) – A sharp decline in financial asset prices, rising inflation and a major new wave of COVID-19 infections pose the biggest risks to the global economy, the Bank said on Monday. Bank of Israel in its semi-annual Financial Stability Report.

And although Israeli banks and insurance companies maintained stability in the second half of 2021 with solid capital ratios, this could be derailed if financial asset prices continue to fall, according to the report.

Israeli stock prices have fallen 1.1% so far this year, on the heels of global declines, after rising 31% in 2021.

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The central bank said that while the prices of financial assets in Israel continued to rise in 2021, “price indices show that the gap between financial asset prices and corporate profits is wider than by the past”.

The report did not raise concerns about rising real estate and financial asset prices and corporate and household indebtedness in Israel, where the inflation rate is just 2. 8%, well below the United States and some European countries.

“Total household credit quality is better than in the pre-crisis period,” he said.

He noted that new mortgages taken out in 2021 were historically high and that as of November payment had yet to fully resume on about 9% of mortgages that had been deferred during the COVID-19 pandemic, mostly in 2020.

At the same time, non-housing debt has rebounded slightly in 2021, with growth accelerating in recent months. The payment of 1% of the non-real estate credit which had been postponed had not yet resumed.

After a weak 2020, Israeli banks have recovered well from the crisis, posting sharp profit gains in the first three quarters of 2021 as they unwind provisions made last year to protect against defaults. payment.

Israel’s banking regulator has therefore agreed to allow banks to resume regular split payments in 2022. read more

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Reporting by Steven Scheer; Editing by Alexander Smith

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