Karnit Flug tapped as Bank of Israel governor
Acting governor to replace Stanley Fischer, who resigned earlier this year; Flug will be first woman to head central bank
Karnit Flug was chosen as the new Bank of Israel governor Sunday afternoon, ending several months of uncertainty over who will helm the country’s central bank.
Flug, who has served as acting governor since the resignation of Stanley Fischer earlier this year, will be the first woman to take the position.
The tapping of Flug for the influential post comes after a months-long process in which several foreign candidates were offered the post, but turned it down. Flug, whom Fischer had recommended for the position upon his resignation, was not originally favored by Prime Minister Benjamin Netanyahu and was named after Lawrence Summers, a former US Treasury secretary and president of Harvard University, turned down the post last week and after two other local candidates reneged after accepting the post.
“I want to thank the prime minister and the finance minister for the faith they have placed in me,” Flug told reporters after he appointment was announced. “The Israeli economy and the Bank of Israel have major challenges to contend with in the coming years and I’m sure that with the dedicated workers we will try to promote the important things on the agenda.”
Flug, 58, is a mother of two with an economics doctorate from Columbia University. She had threatened to resign from the bank in July, when passed over for the post, but stayed on, and on Sunday thanked her Bank of Israel colleagues for their support in recent months.
The announcement of the selection of Flug was made after a meeting between Netanyahu and Finance Minister Yair Lapid, who said in a joint statement, “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.”
Summers was one of a number of overseas candidates reportedly approached by Netanyahu to have spurned the job. Summers had been widely seen as a possible new head of the US Federal Reserve, but withdrew from consideration last month in the face of rising opposition.
After a meeting late Wednesday, Netanyahu and Lapid said they would name a new governor by Sunday.
Flug, who has served as deputy governor of the Bank of Israel since 2011, worked at the IMF before joining the Bank of Israel in 1998.
A former research director at the central bank, Flug has served on several public committees, including the Trajtenberg committee, which dealt with the government response to the social protest movement of 2011, and the Brodet committee, which in 2007 presented a comprehensive report on IDF management and budget.
In September, Flug told Yedioth Ahronoth that sexism may have played a part in Netanyahu’s disinclination to select her for the job. After Fischer recommended her, and others were offered the position but declined, Flug said she realized “the intensity of the resistance against my appointment to governor of the bank” and begun to think that “maybe my disqualification was connected… to my being a woman.”
The Hebrew media speculated last week that Professor Zvi Eckstein had become the leading candidate for the influential post. Eckstein is the dean of the School of Economics at Herzliya’s Interdisciplinary Center (IDC) and served as the Bank of Israel’s deputy chief from 2006 to 2011. But Flug was recognized Saturday to be back in the running.
Two previous candidates — Jacob Frenkel and Leo Leiderman — dropped out after accepting the post. Frenkel, a previous governor, became embroiled in reports of a shoplifting scandal, which he denied, and Leiderman was the subject of complaints to the vetting committee, known as the Turkel Commission, which he might have resolved but chose to avoid the protracted process.
Another vetted candidate was the internationally renowned Professor Mario Blejer. A final vetted candidate, Victor Medina, was considered an outside bet.
Channel 10 news revealed over the summer that three Nobel Prize-winning American economists, Thomas J. Sargent, Robert Lucas, Jr. and Edward C. Prescott, recommended Eckstein to Netanyahu and Lapid.
Fischer, an American-Israeli economist, served as bank chief from 2005 until June 30, having announced his intention to step down in January. He was previously chief economist at the World Bank.
AP contributed to this report.
