Amir Yaron inaugurated as new governor of Bank of Israel
Yaron succeeded Karnit Flug, the first woman to have been appointed to the position.
By GREER FAY CASHMANUpdated: DECEMBER 25, 2018 07:38
Now it's absolutely official. The inauguration of Professor Amir Yaron as the 10th Governor of the Bank of Israel took place at a ceremony on Monday at the President's Residence in the presence of President Reuven Rivlin, Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon.It became official only after Rivlin signed the appointment before a packed hall that included Yaron's parents, wife, children and siblings, former governors of the Bank of Israel, Civil Service Commissioner Daniel Hershkowitz, Jewish Agency Chairman Isaac Herzog, Ministers, Members of Knesset, bankers and business peopleYaron takes up his new post amid heavy falls on the Tel Aviv Stock Exchange which in part resulted from the Wall Street ripple effect around the world, following President Trump's announcement of the withdrawal of US troops from Syria. Some economic pundits have interpreted this as a red alert for a global economic crisis, but Rivlin, Netanyahu. Kahlon and Yaron each in their individual addresses made a point of emphasizing that Israel's economy is strong and stable. Kahalon even so far as to say that it's the best it's ever been.Yaron succeeded Karnit Flug the first woman to have been appointed to the position. Flug, who was recommended by her predecessor Stanley Fisher, served for five years, and frequently incurred Kahlon's displeasure. The two had difficulty in finding common ground, though Kahlon said in his address that during his tenure the Finance Ministry had worked intensively with the Bank of Israel, and the common goal, regardless of differences was success. Great efforts had been made to reduce unemployment "because we know how unemployment affects the family and the community," he said."The strength of a country depends on its economy," Kahlon declared. "A strong economy makes for a strong country."Rivlin, Netanyahu and Kahlon were unanimous in praising Yaron for his academic achievements which according to Rivlin made him "the right man for the right job at the right time."Natanyahu said that Yaron was "the right man in the right place – and that place was the State of Israel." He and Kahlon had searched for suitable candidates at home and abroad, he said. Netanyahu had been particularly keen to find someone with the highest qualifications and Yaron filled the bill. "There's no doubt that you're the most suitable person for the job," Kahlon told the new governor, as he grudgingly acknowledged Flug's contribution to the economy. Netanyahu was much more generous and thanked her for her "important work for the State of Israel and the Bank of Israel."AdvertisementYaron is the second Israeli expatriate to be lured home by the plum job which notwithstanding its prestige incurs many headaches. The first expat was Professor Jacob Frenkel, who had previously served as Economic Counsellor and Director of Research at the International Monetary Fund. He was Governor of the Bank of Israel from 1991 to 2000. He would have liked to return to Israel sooner, but he was simply over-qualified for the positions that were available, and so he spent some twenty years in the US before coming home. In 2013, he was nominated to serve again as Governor of the Bank of Israel, but an unfortunate incident that had taken place in Hong Kong Airport, was dredged up by the media and cast a shadow over Frenkel's integrity. The upshot was that he withdrew his candidacy and was not appointed a second time, but was present for Yaron's inauguration. Frenkel currently serves as chairman of the Board of Governors at his alma mater, Tel Aviv University.Yaron, like Frenkel is a Tel Aviv University alumnus., and like Frenkel headed for the US to improve his career and his fortune. He has returned home after 25 years abroad.The average period of service for the Governor of the Bank of Israel is four to five years, though some governors have served longer, but none as long as David Horowitz, the first governor of who served from 1954 to 1971Despite the festivity surrounding the inauguration, there was also a somber note. At the start of his address, Rivlin, conscious of tumbling figures on stock exchanges in Tel Aviv and around the globe, said "we are meeting during a tense economic and financial period. Over the years, Israel's captains of economy steered us wisely and calmly through global and local economic crises and shocks and demonstrated the strength and stability of Israel's economy."In an attempt to ward off panic in the face of the current crisis, Rivlin expressed his confidence that the calm temperament of the past would continue to guide Israel through stormy waters.Rivlin also spoke of the need to close the social gap and to take care of the weakest sectors of society.All four speakers stressed the imperative of the Bank of Israel operating professionally, independently and free from political pressure.Netanyahu referred to the processes undertaken to help Israel weather past economic crises, and was certain that Israel would also overcome the current turbulence in capital markets.In relating to economic reforms he remarked on various bureaucratic obstacles s which have been eliminated to order to smooth the path to a free economy.Netanyahu spoke of Israel's competitive edge, which could be maintained he said through innovative products and services and through finding new markets. Israel has the ability to do both he stated.Where there is uncertainty he commented, is in the monetary system. He could not tell whether bitcoin or some other monetary framework would replace banknotes.He saw greater efficiency and speedy adaptation to the new era of technology as the main economic and financial challenges facing the country.Yaron for his part envisioned normalization as the immediate challenge confronting the Bank of Israel, with interest rates as the main tool governing monetary policy.He pledged that the Bank of Israel will continue to cooperate with the government in an advisory capacity with a view to boosting economic growth. He opined that it was not necessary for the bank to intervene too much in currency exchange rates. He was grateful to Flug, he said for the time that she had spent in briefing him, and he was looking forward to modernizing the Bank of Israel so that it would be in a position to act swiftly in an era of ever changing technological and financial markets.It was essential for Israel to be prepared to act ahead of any crisis, rather than after it happens, he advocated.