New Bank of Israel governor installed amid economic turmoil
Amir Yaron takes up key financial position the day after a stock market fall and with national elections in sight
The Bank of Israel’s new governor, Amir Yaron, was installed Monday, a day after a slump in the Tel Aviv Stock Exchange triggered by loses in New York last week.
Yaron took up the position at a ceremony at the President’s Residence in Jerusalem attended by Prime Minister Benjamin Netanyahu, President Reuven Rivlin, and Finance Minister Moshe Kahlon.
He replaces Karnit Flug, who retired in November after five years as governor of Israel’s central bank. The cabinet approved Yaron’s nomination in November.
Yaron had been working in the US as an economics professor at The University of Pennsylvania’s Wharton School. He is also a research associate at the US National Bureau of Economic Research.
He pursued his undergraduate and masters degrees at Tel Aviv University, followed by a doctorate from the University of Chicago. According to his resume, he specializes in asset pricing, investments, risk-return strategies, macroeconomics and finance.
“You are the right person at the right time,” Rivlin said, warning that difficult times may be looming.
“We are meeting here today, perhaps at the start of a tense period in terms of the economy and finance,” he said. “Over the years the captains of the Israeli economy navigated us intelligently and cool-headedly through global and local economic crises and shocks, and demonstrated the strength and stability of the Israeli economy. I am sure that coolness of spirit and reason will continue to steer us through the turbulent waters.
“Raising prices harms… middle-class Israelis and certainly those who are in the weakest strata,” Rivlin continued, referring to recent hikes in the price of some basic items and electricity. “Preserving price stability is one of the main jobs of the Bank of Israel, which acts as the economic adviser to the government.”
Rivlin also cautioned Yaron against being swept up by the politics of the coming national elections, which are scheduled for November 2019 but may be held earlier.
“The governor of the Bank of Israel is not going to elections,” the president said. “The Bank of Israel sits with the people, its eyes on the figures, the facts and the members of the public whose voices are sometimes not heard.”
Netanyahu expressed his confidence that Israel’s economy could weather the current stock exchange slump.
“The processes that we did until today helped us through large storms,” he said. “I am certain that we will succeed in the storms in the capital market once again, because the Israeli market generates value.”
Netanyahu said that the main objectives for Yaron were to increase competition in the banking sector, and to prevent a credit bubble.
Finance Minister Kahlon noted, “Recently, we have worked closely with the Bank of Israel. There have been ups and downs. There is a built-in tension between the Finance Ministry and the Bank of Israel. But there is one, united goal — how to succeed.”
Sharp falls were seen Sunday in Tel Aviv, particularly for companies listed on both local and US exchanges. The Tel Aviv-35 Index was down 5.43 percent and the Tel Aviv-125 Index down 5.08%.
The slump came after another day of big losses Friday left the US market with its worst week in more than seven years. All of the major indexes have lost 16% to 26% from their highs this summer and fall. Barring huge gains during the upcoming holiday period, this will be the worst December for stocks since 1931.
Israel has recently seen a wave of price hikes in electricity, water, gas and cellphone bills, as well as food, drinks, insurance and property tax, with an increasing number of companies raising their prices.
On Friday several hundred people demonstrated in Tel Aviv against the price increases.
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