Top economists plead for Bank of Israel governor to be given second 5-year term

Group of economists warns of ‘irreversible damage’ to economy if uncertainty about Amir Yaron continuing in his position is not removed during challenging war period

Sharon Wrobel is a tech reporter for The Times of Israel.

Bank of Israel Governor Amir Yaron speaks during a press conference in Jerusalem, on April 11, 2022. (Flash90)
Bank of Israel Governor Amir Yaron speaks during a press conference in Jerusalem, on April 11, 2022. (Flash90)

A group of senior economists on Saturday night appealed to lawmakers, including war cabinet minister Benny Gantz, to act to make sure that the term of the current Bank of Israel Governor Amir Yaron, which officially ends next month, is extended by another full five-year term.

With the outbreak of the fighting triggered by Hamas’s October 7 terror onslaught that killed over 1,200 in Israel’s largest-ever mass casualty event, Yaron reassured investors last month that he would stay in office until at least the end of the current emergency period to help cope with the challenges to Israel’s wartime economy.

“Israel’s economy needs stability and professionalism in these difficult days,” the group of economists said. “Failure to extend the governor’s term of office may cause tremendous damage that is irreversible.”

The forum of economists has in recent weeks sent letters to Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich asking the government to make professional and responsible decisions, including the extension of Yaron’s tenure, which have remained unanswered. Now they are saying that they are turning to Gantz and the heads of the coalition to immediately stop what they called the government’s “scandalous conduct” with regard to the economy.

By law, Yaron can be appointed for one additional term of five years as Bank of Israel governor subject to the government’s recommendation to the president.

The group of economists called on lawmakers to ensure that Yaron, whom they called the “responsible adult and senior professional figure” of the Israeli economy, is given another full term of five years.

Israeli shekels, Jerusalem. (Orel Cohen/ Flash90)

“The time has come to think about the good of the State of Israel and its future as a progressive country,” the group demanded.

Concerns about sharp moves in the foreign exchange rate in the first days of the war prompted the Bank of Israel, led by Yaron, to swiftly announce a plan to sell up to $30 billion in forex. With this plan, the central bank was able to intervene in the market and stem steep shekel depreciation.

Among the signatories of the appeal are Prof. Zvi Eckstein, former deputy governor of the Bank of Israel; Rony Hizkiyahu, former Bank of Israel supervisor of banks and accountant general; Yair Avidan, former supervisor of banks; Prof. Avi Ben-Bassat, former finance ministry director general; Prof. Eugene Kandel, former chairman of the National Economic Council; Prof. Eytan Sheshinski of the Hebrew University of Jerusalem; and Prof. Leo Leiderman of Tel Aviv University.

Yaron, who is due to end his term on December 23, was expected to make a decision about whether he will continue with another five-year term after the Jewish High Holidays, which ended the day the war broke out between Israel and the Hamas terror group.

In the weeks before the outbreak of the war, there was much uncertainty over whether Yaron would request another term and if lawmakers would want to keep him in the job.

Yaron, who took up the post as governor in 2018, has been critical of the government’s proposed judicial overhaul earlier this year. More recently, the Bank of Israel criticized the government’s war budget plan to tackle the costs of the ongoing fighting with the Hamas terror group.

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