Israel will miss Fischer who kept the economy stable

The list of Stanley Fischer’s achievements over the eight years he served as Governor of the Bank of Israel is long and varied but they can be summarised in one line — Professor Fischer was both the responsible grown-up and respectable face of Israel’s economy, and the man who should take the credit for shielding the country from the global recession.

Getting Mr Fischer, the former chief economist of the World Bank and president of Citigroup International, to make aliyah in 2005 and head Israel’s bank was a major coup for then Finance Minister Benjamin Netanyahu and a significant display of confidence in the Israeli economy.

The fact that his announcement this week to resign, three years after he started his second five-year term, caused only a minor, temporary dent on the Tel Aviv stock exchange and the shekel’s exchange rate, is also proof of his success at keeping the stable economy stable.

His main achievements have been prolonged growth and stability, which he achieved mainly by exerting influence behind the scenes to ensure budgetary discipline and firm control of private banking. Crucially, he did not allow the kind of deals that brought down banks in the US and Europe.

Mr Fischer boosted Israel’s foreign currency reserves beyond $80bn and was key to the successful campaign for Israeli membership of the OECD.

His record is not without blemishes. His close control of local banks made them much less competitive and, although he brought down interest rates to their lowest rate ever, he still failed to rein in housing prices. Despite these failings, the government and most of the business community would have dearly loved Mr Fischer to have completed his term.

Last updated: 1:25pm, January 31 2013