BICOM

Israel’s Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid yesterday announced that Jacob Frenkel, who served as Governor of the Bank of Israel from 1991-2000, will return to the position when Stanley Fischer stands down at the end of the month.

The choice of Frenkel comes as a surprise with Globes last week reporting that Harvard professor Elhanan Helpman would be approached to fill the roll. Fischer himself had reportedly backed his deputy Karnit Flug to succeed him, while Avi Ben-Bassat and Manuel Trajtenberg had also been linked with the post. Fischer announced in January that he would be standing down due to personal considerations following what is widely perceived as an incredibly successful tenure. Fischer was instrumental in promoting Israel’s successful bid for acceptance into the Organization for Economic Cooperation and Development and under his guidance, unemployment in Israel shrunk from 11 to 7 per cent, GDP has risen by 15 per cent during the last three and a half years and the rate of inflation has remained close to 2 per cent.

Frenkel though will return to the role with an equally impressive reputation. During his previous term, Frenkel was credited with bringing Israeli inflation down to levels of other Western economies and liberalising financial markets and foreign exchange systems. Frenkel currently serves as Chairman of JP Morgan International. His previous roles have included Chairman of Merril Lynch International, Vice-Chairman of AIG insurance, and Director of Research at the International Monetary Fund. Frenkel studied at the Hebrew University and received a doctorate from the University of Chicago.

Frenkel’s appointment, given his background and stature, is likely to be viewed as a continuation of Fischer’s efforts. However, it must now be approved by a committee headed by Judge Yaakov Turkel and then a vote of Israel’s cabinet.