Cabinet approves Karnit Flug as Bank of Israel chief

The cabinet unanimously approved Karnit Flug’s appointment as the next Bank of Israel governor on Sunday, ending a saga of several months as Israel searched for a bank chief.

Flug, who served as acting governor since the resignation of Stanley Fischer from the post at the end of June, was the third person to be nominated for the post, after the previous two pulled their candidacy. She is the first woman to fill the role.

“Karnit Flug has the appropriate background and experience and she has fulfilled her position [as acting governor] in recent months very well,” Prime Minister Benjamin Netanyahu said at the cabinet meeting, according to a statement released by his office. “In addition to the fact that we are successfully navigating the Israeli economy in the face of the global crisis, Israel’s economic leadership must continue to advance growth and employment, increase exports and lower housing prices. We wish Karnit Flug success.”

Flug’s nomination for Bank of Israel governor was approved last Wednesday by the formal vetting committee for senior government officials headed by former Supreme Court justice Jacob Turkel.

Flug was nominated on October 20 by Netanyahu and Finance Minister Yair Lapid. She had been the recommended choice of Fischer, widely hailed as among Israel’s most successful Bank of Israel heads.

“We have been impressed by Dr. Flug’s performance as acting governor in recent months and we are certain that she will continue to assist us in spurring the Israeli economy to additional achievements in the face of the global economic upheaval,” they said at the time.

Flug only received the job after several other candidates either declined or were forced out of the running by complaints and scandals.

Jacob Frenkel, a former bank chief who was the first choice, dropped his candidacy after being questioned about allegations that he shoplifted from a Hong Kong airport duty free shop. The second choice, Leo Liederman, also pulled out several days after being nominated, though he did not give a reason.

According to reports, Netanyahu also offered the job to Lawrence Summers, a former president of Harvard, former Treasury secretary in the Clinton administration and key economic adviser to President Barack Obama. Summers is said to have declined the offer.