May 23, 2017

Bank of Israel Chief in ’90s Is Choice to Lead It Again

JERUSALEM — Jacob Frenkel, an inflation hawk who was Bank of Israel governor in the 1990s, will return to the helm of the central bank, Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid said on Sunday.

Mr. Frenkel will replace Stanley Fischer, who is stepping down at the end of June after eight years on the job, having guided Israel’s economy through the global financial crisis.

Mr. Frenkel, 70, beat out the deputy governor, Karnit Flug, who will most likely be acting governor until Mr. Frenkel starts. The date of his arrival was not announced.

“He is a world-renowned figure, which is what Netanyahu was looking for,” said Jonathan Katz, an economist at HSBC.

As governor from 1991 to 2000, Mr. Frenkel was credited with reducing inflation, liberalizing financial markets and removing foreign exchange controls.

He is chairman of JPMorgan Chase International, and he has also served as vice chairman of the American International Group and chairman of Merrill Lynch International. Mr. Frenkel also is the head of the Group of Thirty, a private consulting group on global and financial issues.

Joseph Fraiman, chief executive at Prico Risk Management and Investments, said Mr. Frenkel would “fill the position of Fischer with quality and authority.” He added, “No less important, Frenkel will benefit from the international credit that is greatly needed for the Israeli economy, especially in the current period.”

Mr. Frenkel, whose appointment requires cabinet approval, will face several challenges, including the upholding of Mr. Fischer’s policies toward Israel’s government and working to halt fast-rising home prices.

Israel’s economy grew 3.2 percent in 2012, a rate that is expected to slow to 2.8 percent this year, excluding the start of natural gas production.

Inflation, which ranged from 1.3 to 18 percent in the 1990s, was at an annual rate of 0.9 percent in May. At the same time, Israel’s currency remains strong.

To encourage economic growth and keep exports competitive, the Bank of Israel reduced its benchmark interest rate twice in May, to 1.25 percent. The central bank will review interest rates on Monday, and analysts largely believe the key rate will stay unchanged.

When Mr. Frenkel was last in the job, the governor alone made interest rate decisions. Now, there is a six-member monetary policy committee with the bank chief as chairman.

Mr. Frenkel “will need to work harmoniously with the monetary council he inherited from Fischer,” said Yaniv Pagot, chief strategist at the Ayalon Group. “This is not a simple challenge that could, in a certain situation, bring the first cracks.”

He said that, with Israel’s foreign exchange reserves nearing $80 billion, it would be interesting to see whether Mr. Frenkel would continue intervening in the currency market and buy dollars to defend Israel’s exports if the shekel continued to strengthen.

Article source: http://www.nytimes.com/2013/06/24/business/global/bank-of-israel-chief-in-90s-is-choice-to-lead-it-again.html?partner=rss&emc=rss

Israel Central Bank Chief to Step Down in June

In a brief statement, the Bank of Israel said governor Stanley Fischer informed Prime Minister Benjamin Netanyahu that he will step down on June 30. It gave no explanation for the departure and said he would give a news conference on Wednesday to formally announce the decision.

Fischer, an internationally respected economist, served as deputy director of the International Monetary Fund and held top posts the World Bank and Citigroup Inc. before taking over Israel’s central bank in 2005.

His monetary policies and Israel’s tight control of its banks are seen responsible for the nation’s stability despite the worldwide economic crisis that hit during his reign. Israel’s economy continues to grow, and unemployment is roughly 6.5 percent, relatively low in world terms.

His departure comes two years before the end of his second five-year term. Israeli media speculated that his resignation was due to personal reasons, not a disagreement with the government.

In a statement, Netanyahu praised Fischer and thanked him for his service.

“Professor Stanley Fischer played a major role in the economic growth of the state of Israel and in the achievements of the Israeli economy,” he said. “His experience, his wisdom and his international connections opened a door to the economies of the world and assisted the Israeli economy in reaching many achievements during a period of global economic crisis.”

Finance Minister Yuval Steinitz called Fischer “an asset not only to the Israeli economy but also to Israel’s international image, thanks to his status and connections in the world.”

Fischer, 69, was born in North Rhodesia, now Zambia, and educated at the London School of Economics and Massachusetts Institute of Technology. He served as the thesis adviser to U.S. Federal Reserve Chairman Ben Bernanke at MIT in the 1970s.

At the IMF, he worked on resolving financial crises in Mexico, Russia, and Southeast Asia during the 1990s. He was a vice chairman at Citigroup when he was hired as central bank chief.

Fischer was initially seen as an outsider when he first arrived, wearing tailored suits in an open-collar Mediterranean country and speaking heavily accented Hebrew. He quickly won plaudits for his calm demeanor and success in managing the economy through turbulent times.

In Israel, Fischer has been credited with moving early to cut interest rates and intervening in the currency market to protect the local export sector.

With the economy improving in 2009, Israel began raising interest rates, making it the first nation to take such a step toward post-recession stabilization. He was also instrumental in promoting Israel’s successful bid for acceptance into the Organization for Economic Cooperation and Development, a grouping of 30 of the world’s richest nations.

In mid-2011, Fischer applied for the top job at the IMF, after its director, Dominique Strauss-Kahn, was forced to resign. At the time, he called it a “once-in-a-lifetime” opportunity. He was disqualified because, 67 years old at the time, he was two years above the maximum age for an incoming managing director.

Sever Plocker, an Israeli economic commentator, said Fischer was “the responsible adult” of the Israeli economy throughout his eight-year tenure and revamped the entire approach to economic thinking in Israel.

Fischer pushed for a bill outlining a new governing structure for the central bank that promotes transparency and stability. He maintained large sums of foreign currency reserves, now standing at some $75 billion, and wielded significant influence over fiscal policy that has led to Israel’s high growth rate and low unemployment.

“Because of his status, everyone was afraid of him and his criticism, and he is responsible for Israel’s government carrying out a largely responsible policy these past eight years,” said Plocker, the economic editor at the Yediot Ahronot daily.

“He was willing to use interest rates as a tool. Previous governors saw interest rates only as a way to battle inflation. He also used them to prevent unemployment and recession,” Plocker said.

“No man is irreplaceable, but his departure is a huge loss to the Israeli economy,” he said.

Fischer faced some criticism from those who said his low interest rate policy contributed to a surge in Israel’s housing prices. Plocker countered that the effect was negligible, and a lack of supply was the main cause of the housing crisis.

His successor will face significant challenges, including the still skyrocketing real-estate market, shielding the country from the European economic crisis and coping with a larger than expected government deficit that could well bring deep cutbacks.

Article source: http://www.nytimes.com/aponline/2013/01/29/world/middleeast/ap-ml-israel-economy.html?partner=rss&emc=rss

I.M.F. Names Lagarde and Carstens as Contenders for Top Post

FRANKFURT — The long-shot bid by Stanley Fischer, the governor of the Bank of Israel, to become managing director of the International Monetary Fund appeared to already be over after the international lender’s executive board said late Monday that it would only consider two other candidates.

The board said in a statement that it would consider the candidacies of Christine Lagarde, the finance minister of France who is seen as the front-runner, and Agustín G. Carstens, the governor of the Mexican central bank.

Without mentioning Mr. Fischer by name, the board statement suggested that he had missed the deadline for submitting his application. “The period for submitting nominations for the position of the next managing director closed on Friday, June 10,” the board said.

Mr. Fischer, a former deputy director of the I.M.F. and influential economist, announced his candidacy on Saturday.

However, Mr. Fischer said that he had been eliminated because, at 67, he exceeds the age limit of 65 for candidates for managing director.

He criticized the I.M.F. for refusing to change its rules.

“I think that the age restriction, which was set in the past at 65, is not relevant today,” Mr. Fischer said in a statement Tuesday. “I was hoping that the I.M.F. board of directors would change its regulations, not only for the sake of my candidacy, but also for the sake of future candidates for the position of managing director.

“I have no regrets for having submitted my candidacy,” Mr. Fischer said.

He said he would remain as governor of the Bank of Israel.

A former vice chairman of Citigroup who is credited with stabilizing the Israeli currency and steering the country through the global financial crisis, Mr. Fischer probably would have also faced opposition from Arab countries. He is a citizen of the United States and Israel.

The I.M.F. board’s decision seems to clear the way for Ms. Lagarde to assume the post, which became vacant after Dominique Strauss-Kahn resigned last month to fight charges he sexually assaulted a hotel maid in New York.

Ms. Lagarde has been on a worldwide tour of countries including Brazil, India and China in what appears to be a successful campaign to win support from developing nations.

Russia has also nominated Grigori A. Martchenko, Kazakhstan’s central bank president. He also appeared to have been ruled out by the I.M.F. board.

Article source: http://feeds.nytimes.com/click.phdo?i=af60680b893f55fa18fc71c46f8b0d99