Bank Hapoalim economist picked to head central bank

Economist Leo Leiderman was selected Wednesday as the next Governor of the Bank of Israel, two days after Jacob Frenkel notified Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid Tuesday that he would not be taking up the position.

Leiderman, a longtime professor at Tel Aviv University, currently serves as the chief economist of Bank Hapoalim, and previously headed the Bank of Israel Research Department. He also served as director and head of the emerging markets economic division at Deutsche Bank in New York and London.

“This is a very emotional day,” he said Wednesday night to reporters at his home, declining further comment except to say, “We’ll have lots of opportunities to speak in the future.”

Netanyahu and Lapid came to a decision over the appointment following an afternoon of intensive discussions in which they determined that Leiderman would at this point be the most suitable candidate for the prestigious post, the Prime Minister’s Office said. The appointment is still subject to approval by the Appointments Advisory Committee headed by retired Supreme Court Justice Jacob Turkel.

“I thank Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid for their trust in me,” Leiderman said following the announcement. “I’m excited to return to the Bank of Israel, and will work to help Israel’s economy overcome the challenges we face.”

Leiderman was born in Argentina and immigrated to Israel at the age of 17. He earned his BA in Economics at the Hebrew University and completed his Masters as well as his PHD at the University of Chicago. His doctoral thesis on macro-economics was written under the guidance of Nobel Laureate Professor Robert Lucas.

Karnit Flug, who currently serves as acting governor of the Bank of Israel, welcomed Leiderman’s appointment and wished him a successful term. However Flug, who also sought the job, also said that after assisting Leiderman’s transition to the Bank of Israel, she plans on leaving the bank after 25 years of employment at the institution.

Leiderman comes to the job as Israel is entering a period of austerity measures meant to slake a deep budget deficit and amid fears that the financial downturn in Europe could also play havoc with Israel’s economy.

He has spent much of his career researching the impacts of inflation, economic stabilization policy, central bank policy and emerging market economies.

Leiderman’s appointment was necessitated after Frenkel withdrew his candidacy amid a scandal over alleged attempted shoplifting in Hong Kong several years ago.

Frenkel said the shoplifting claim arose after a misunderstanding, and bitterly withdrew his candidacy Monday complaining over a media campaign of vilification.

“In an unreasonable and unbearable manner, a person can be put on the spot, just based on assumptions,” Frenkel told Channel 2 after announcing he would be dropping his candidacy.