Hapoalim Chief Economist Leo Leiderman nominated as BOI governor

Karnut Flug will step down after 25 years with BOI; Netanyahu and Lapid push Leiderman nomination forward.

July 31, 2013 20:12
2 minute read.
Prof. Leo Leiderman.

Leo Leiderman 370. (photo credit: Courtesy)


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Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid nominated Bank Hapoalim chief economist Leo Leiderman for the post of Bank of Israel governor on Wednesday, just two days after Jacob Frenkel withdrew his candidacy.

If approved, Leiderman will replace Stanley Fischer, who stepped down from the post at the end of June.

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“I am excited to return to the Bank of Israel,” the Argentine-born Leiderman said in a statement thanking Lapid and Netanyahu for their confidence. “I will work to help the Israeli economy meet the challenges that it faces.”

Leiderman previously served as a senior adviser and head of the research department at the Bank of Israel under Frenkel.

The University of Chicago- educated economist, who completed his undergraduate degree at the Hebrew University of Jerusalem after moving to Israel at age 17, was also a professor at Tel Aviv University and a director of emerging markets research at Deutsche Bank.

Fischer’s deputy Karnit Flug, who is currently acting governor and who some speculated would be in the running for the nomination, announced that she would leave the bank a month after the next governor transitioned into the position.

Flug has served at the bank for 25 years.

Knesset Finance Committee chairman Nissan Slomiansky welcomed Leiderman’s nomination and wished him a speedy – and smooth – confirmation process.

Frenkel, who served as governor from 1991 to 2000, withdrew his candidacy to return for a third term after a scandal over alleged shoplifting in a Hong Kong airport in 2006 emerged.

The scandal drew immense public scrutiny, despite Frenkel’s protestations that the incident was a misunderstanding and that there had been no charges filed.

Although Leiderman served at the Bank of Israel under Frenkel, who was seen as an inflation hawk, his economic approach is considered more aligned with that of Fischer, who put greater weight on issues such as poverty and income gaps.

“This is an excellent appointment of an economist with great experience in general and at the Bank of Israel in particular, perhaps the best possible appointment these days,” said Nir Omid, chief investment manager at the Tamir Fishman financial group.

Israel, he continued, needs someone who can find the middle ground between maintaining price stability and economic growth while carefully navigating the foreign exchange market.

Before starting in the position, Leiderman must receive approval from the cabinet and the committee on senior civil service appointments, chaired by retired Supreme Court justice Jacob Turkel – the same committee that evaluated Frenkel.

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