The governor of the Bank of Israel, Stanley Fischer, said Thursday that efforts to develop the securitization market in Israel had not materialized so additional steps were needed to set a legal framework to advance the process to align the country with international markets. "Despite the efforts of the Haimovicz-Asher commission - which we were part of - to advance the development of securitization, the market has not developed in Israel," Fischer said in prepared remarks to the Maariv Securitization conference in Tel Aviv. "Therefore, we need to introduce additional steps as part of reforming our capital market with the aim of developing similarly to international securitization markets." The Israeli economy has, in recent years, been experiencing a severe credit crunch because of the lock up of the primary capital market. As a result, companies have been seeking sources of finance outside the banks. Until now, Israeli companies have participated in securitization deals but outside Israel because of bureaucratic obstacles. "It is therefore of crucial importance that we introduce a securitization law based on the recommendations set out by the Haimovicz-Asher commission to provide a legal framework similar to norms in other countries," Fischer said. The commission's recommendations, which were presented to the Israel Securities Authority at the end of last year, provide clear guidelines for securitization accounting as well as banking, legal and tax issues regarding securitization deals. The securitization of assets has in recent years become a common practice in international markets, turning over trillions of dollars a year in the US and Europe. Securitization is a bond, backed by cash flows originating from various assets. The objective is to isolate the assets from the credit risk associated with the party selling the assets (the originator). The structure of securitization deals requires the originator to set up a special purpose company (SPC) to issue the bonds and handle its interest payments. The result is the transformation of cash flows into a marketable security with a relatively low risk level.