Jitters over Israel’s new head banker

Prime Minister Benjamin Netanyahu sought to reassure the money markets on Sunday when he announced that veteran economist Jacob Frenkel had agreed to return to the post of governor of the Bank of Israel, replacing Professor Stanley Fischer.

Mr Frenkel is currently the chairman of the US bank JPMorgan Chase and was governor in 1991-2000. He is a fiscal conservative and was appointed by Mr Netanyahu to continue his policies of budgetary restraint and to serve as a globally recognised financial spokesman for Israel’s economy, especially at a time when the Treasury Minister is the inexperienced Yair Lapid.

The reception to the appointment was mixed. Some commentators believe that Israel needs a veteran economist like Mr Frenkel to maintain Israel’s status in the global money-markets.

Other observers have pointed out that Mr Frenkel was forced to return large sums of money which he claimed as expenses during his first term as governor, and argued that his past fiscal policies increased inequality.
Although Prof Fischer stood down this week, Mr Frenkel’s reappointment is yet to be confirmed by the Knesset.

Last updated: 11:45am, June 28 2013