The country's banks negotiated the difficulties presented by the global economic crisis in a praiseworthy manner, but challenges remain and they must retain the public's confidence, Bank of Israel Governor Stanley Fischer said Tuesday. "The same time last year we were still at a very difficult stage of the crisis," he said at the Banking Association's annual meeting in Tel Aviv. "The Bank of Israel cut the interest rate several times, as did the world's leading central banks, but we had not seen much yet in the way of results. "Last year, I began my speech with the words, 'You bankers should be praised, and you face great challenges.' This year, I reiterate the words, 'You bankers should be praised for facing the challenges, but there are difficult challenges ahead of us relating to the future of the economy.' "We can feel much better now that the medicine worked, the global economy has resumed growth and the Israeli economy is coming out of the recession better than most of the advanced economies." Fischer said banks had a special role as custodians of much of the public's wealth, which makes them vulnerable to a loss of confidence. "If we did not understand this essential fact two years ago, we should all understand it now," he said. "The level of anxiety created about the safety of Israel's banks following the collapse of Lehman Brothers shows how fragile and vulnerable banks are to a loss of confidence that can destroy the bank's balance sheet very quickly. "Therefore, they have to maintain an adequate level of liquidity, as well as an adequate level of capital, to limit the risks they take and to remind themselves that they are not a hedge fund." Fischer said a bank could only succeed and safeguard its shareholders if it retains the confidence of its depositors and is seen by the public as behaving responsibly. He thanked the Bank of Israel's Banking Supervision Department for its work during the crisis and the banks for implementing the Basel II risk-management guidelines by the beginning of 2010. Fischer said the banking system had unresolved issues that needed to be addressed. "The banking system looks good and is managed well and capital adequacy ratios are high," he said. "Still, there are many unresolved issues that need to be dealt with in the near future about the structure of the Israeli banking system and the financial system more generally." Finance Minister Yuval Steinitz said 2010 could be a good year for the economy if fiscal discipline is maintained and economic reforms are put in place. "We are ending 2009 with cautious optimism," he said at the conference. "We have an opportunity for a good year ahead, driven by continued growth leading the economy gradually to the end of the recovery. It also depends on developments in the world economy. But more importantly, it depends on our economy and the implementation of planned reforms." "Recent data shows that we can now speak of a certain trend pointing to a slowdown in unemployment," Steinitz said. "But if we don't keep fiscal discipline, then the recovery is in danger." Unemployment dropped 0.4 percent to 206,000 in November from 206,800 in October, the Employment Service reported Monday. Unemployment figures have been improving since July, after the jobless rate increased 25% from 168,000 in April, 2008, to 211,200 this June, the Employment Service said.