Outgoing BoI Governor Stanley Fischer 370.
(photo credit: Marc Israel Sellem/The Jerusalem Post)
With Stanley Fischer's eight-year term as Bank of Israel Governor completed as
of Sunday night, his deputy Karnit Flug stepped into the role of acting governor
With Fischer gone, the monetary committee that decides key
rates will be reduced to five members. The odd number means Flug will not have
normal governor's advantage of breaking ties in evenly split votes, as is
normally the case.
Absent unforeseen circumstances, she will continue to
hold the position until Jacob Frenkel, a former governor who Prime Minister
Binyamin Netanyahu and Finance Minister Yair Lapid nominated just a week before
Fischer's final day on the job, is approved for the position.
must pass muster with a committee headed by Judge Yaakov Turkel, get President
Shimon Peres's blessing, and then be approved by the cabinet.
on how quickly that happens, Flug could conceivably hold the position for a
number of months; after David Klein stepped down from the position in 2005, Meir
Sokoler acted as governor for three and a half months until Fischer was formally
Fischer selected Flug as his deputy in 2011, and he was widely
believed to have wanted her to serve as his successor, a prospect several
members of Knesset publicly supported as well in the run-up to Frenkel's
Frenkel's approval faces a number of difficulties. For one,
there is a legal question as to whether he is legally permitted to return for a
third term as governor, having served twice in the 1990s. For another, the state
comptroller forced him to return money to the government following the
conclusion of his last term, alleging that he took hefty pay inappropriately.
Finally, Frenkel's role at AIG during the 2008 financial crisis may come back to
haunt him, though he has not taken responsibility for the company's spectacular
Flug, who completed her doctorate at Columbia University,
served as an IMF economist before joining the Bank of Israel in the