"Any injury to the independence of Bank of Israel will portend disaster for the foreign currency market". This comment came today from Ron Gottler, general manager of Bankers Trust Israel. Gottler is one of the most important foreign investors in Israel. He manages the Israeli branch of Bankers Trust and is responsible for the bank’s overall activity in emerging markets. Bankers Trust is one of the biggest players on the Israeli foreign currency market, and certainly the biggest foreign investor.
In view of Gottler’s leading personal status, and the senior status of Bankers Trust in Israel's foreign currency market, Gottler today sought, in an interview with "Globes", to warn against any curtailment of Bank of Israel’s status or its independence in making decisions. Gottler said that any injury to the Bank’s independence would result in a speculative onslaught on the shekel, meaning that devaluation pressures would resume.
Gottler said the argument over Bank of Israel’s interest rate policy or regarding intervention in the foreign currency market is legitimate. The argument, however, must not result in a curtailment of the bank’s independence or in the transfer of the monetary policy burden to vested interests, as he put it. Gottler was commenting on the proposal that a Board of Governors be formed in which Bank of Israel officials would only constitute a minority.
Gottler said that any injury to the independence of the central bank would run directly counter to generally accepted practise in the world today, and would therefore look very bad in international eyes.
Published by Israel's Business Arena November 29, 1998