Sources inform ''Globes'' that Governor of the Bank of Israel Prof. Stanley Fischer may be willing to serve a second term, provided that three conditions are met: passage of the new Bank of Israel Law; flexibility in setting salaries at the central bank; and consolidation of the Banking Supervision Department with the Ministry of Finance Supervisor of Capital Markets, Insurance and Savings Division under the Bank of Israel.
An associate of Likud chairman MK Benjamin Netanyahu told "Globes", "Netanyahu will accept these conditions."
Fischer's first term as Bank of Israel Governor began on May 1, 2005, and ends in May 2010. Netanyahu, when he served as minister of finance in Sharon government, recommended Fischer as governor.
Amending the Bank of Israel Law is one of the key goals, if not the most important, that Fischer set for himself. He has already achieved his other objective of reaching a salary agreement for the Bank of Israel with the Ministry of Finance. The new law will have two key changes from the current law. The first is the establishment of a monetary council, which the governor will head, that will set monetary policy, including the interest rate. Under the current law, the governor has the sole authority to set the interest rate and carries the sole responsibility for it. The monetary council will include members from outside the Bank of Israel, in addition to the deputy governor and other bank executives.
Alongside the monetary council, an administrative council will be established to function as a kind of board of directors, which will make administrative decisions about the Bank of Israel, including budget policy and salaries.
Fischer will apparently have a friendly ear for his demands with Netanyahu. Many sources believe that Netanyahu has already agreed to Fischer's demands. A source close to Netanyahu said, "Netanyahu has already expressed his support for the new Bank of Israel Law, and views the Dutch model as the solution for the regulatory structure for the capital market."
An aide of Fischer told "Globes" that Netanyahu and Fischer are friends and have many common friends. "They speak the same language. They belong to the same clique, but haven’t had the chance to work together. It shouldn’t be forgotten that Netanyahu brought Fischer to Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009