By Zeev Klein and
Israeli Prime Minister Benjamin Netanyahu announced
Sunday that former Bank of Israel Governor Prof. Jacob Frenkel, who headed the
central bank between 1991 and 2000, will replace outgoing Bank of Israel
Governor Stanley Fischer, whose term will end next week.
Jacob Frenkel, who Prime Minister Benjamin Netanyahu has nominated to be the next Bank of Israel governor. Credit: Shachar Azvan.
The new governor’s nomination is pending the approval of
the Public Service Nominations Committee, headed by Judge (ret.) Jacob Turkel,
as well as a cabinet vote. The nomination faces a legislative hurdle, as the
Bank of Israel Law of 1954 limits the governor to two five-year terms. The
government may have to pass an amendment to the law to facilitate Frenkel’s
Once confirmed, the 70-year-old Frenkel will be sworn in
as Israel’s ninth central bank chief by President Shimon Peres. Frenkel, a
laureate of the 2002 Israel Prize in Economics, currently serves as chairman of
JPMorgan Chase International, one of the three largest banks in the United
States. He is expected to take office in mid-July.
Frenkel, who in the past rejected former Prime Minister
Ariel Sharon’s offer to become the finance minister, agreed to resume his
position as the governor of the Bank of Israel after Netanyahu’s top candidate
for the position, Professor Elhanan Helpman, declined.
Israeli Finance Minister Yair Lapid met with Netanyahu
over the weekend to finalize Frenkel’s nomination. Netanyahu then informed
Fischer of the decision and he, in turn, informed Deputy Governor Dr. Karnit
Flug—Fischer’s choice to succeed him in the post—of the prime minister’s
Frenkel’s nomination came as a surprise, as the two-time
bank governor was not in the running to replace Fischer. Netanyahu’s short list
included former head of the government’s committee for social reform Professor
Manuel Trajtenberg, head of the National Economic Council at the Prime Minister’s
Office Professor Eugene Kandel, Bank Hapoalim Chief Economist Leo Leiderman, and
Professor Avi Ben-Bassat, former director-general of the Finance Ministry.
The nomination was announced as the Bank of Israel was
holding a farewell gala for Fischer, which was attended by Netanyahu, Peres,
the cabinet ministers, the chairpersons of Israel’s various banks, and some 280
other prominent figures.
“We were blessed by your work in the eight years during
which you served in this position,” Netanyahu told Fischer. “We steadily
weathered the global financial crisis and you were instrumental in that. It was
not taken for granted.”
“There is currently a wave of harassment directed at the
private sector—the sector on which the entire economy relies—portraying the
making of profits as a crime. This at a time when we need initiative and
action, activism and creativity from our business women and men, who will lead
the Israeli economy forward,” Netanyahu said.
Lapid told Army
Radio on Monday, “Frenkel’s nomination is wonderful and undisputed. He was
basically called up to serve his country again and that is not a simple thing
since he will be taking a substantial pay cut.”
Knesset Finance Committee Chairman MK Nissan Slomiansky
(Habayit Hayehudi) welcomed the nomination, calling it “a worthy appointment
that is well suited to meet the challenges the Israeli economy faces at this