Karnit Flug .
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
One of the central problems facing advanced economies is how exactly to deal with the tumultuous global events affecting businesses and consumers. Luckily for Israel, it has Karnit Flug leading its central bank.
As Flug closes out her third year as the Bank of Israel’s governor and the top economic adviser to the government, she’s played a crucial role in guiding Israel’s economy. She has worked to temper politicians’ capricious spending habits and boldly moved to lower Israel’s interest rate to a record low.
She has also promised to do what is necessary to get the country’s too-low level of inflation back on track and keep the economy growing, even if it means using unconventional tools such as quantitative easing or negative interest rates. And she has gone to battle with Finance Minister Moshe Kahlon to ensure that the process of introducing competition to Israel’s overly concentrated banking system does not overshoot and destabilize the banks, which would be disastrous for the economy.
Flug does not win every battle she wages.
Both Kahlon and his predecessor, Yair Lapid, blew right through the deficit targets she advised them to follow, and her regular warnings that Israel underspends on education, health and welfare have not changed the government’s priorities.
She has, however, remained a professional voice of reason in a decision-making process that so often devolves into political deal-making, relying on research and data to back up her positions. She shines light on important issues such as inequality and minority labor integration, not only as social problems but as economic challenges. Small wonder she’s regularly been among the few central bankers in the world given the highest marks in their fields by Global Finance Magazine