A decision on the safety net for pensions is liable to be postponed indefinitely. After a long meeting last night, Prime Minister Ehud Olmert, under the shadow of Attorney General Menachem (Meni) Mazuz's announcement that he intended to file an indictment against him, said that the Ministry of Finance should present Olmert's plan for a safety net to National Economics Council chairman Prof. Manuel Trajtenberg.
At the same time, the Ministry of Finance and the Bank of Israel were asked to work together with the Prime Minister's Office to formulate a uniform and agreed-upon model for the safety net. No deadline was set for submitting the model, nor was a time set to decide on it.
Nonetheless, it is possible that the political pressure at the meeting that Olmert summoned today will force the Ministry of Finance to speed things up.
At the meeting, Deputy Governor of the Bank of Israel Zvi Eckstein continued to present the unclear and evasive position of Governor of the Bank of Israel Prof. Stanley Fischer on the safety net. On one hand, it seems that Fischer and the Bank of Israel do not support the deployment of a safety net. Their opposition to the idea is on conceptual and financial grounds, and is partly driven by concern that it is liable to skew investment decisions, but they will not explicitly say so.
Sources at the Bank of Israel claim that its chiefs are critical of the Ministry of Finance for being "asleep at the watch" with regard to oversight of the financial institutions that manage pension investments. However, Fischer's desire for peaceful relations between the Bank of Israel and the Ministry of Finance resulted in no public statements about such reservations. The Bank of Israel says that instead of imposing strict principles on regulating non-bank financial institutions, the Ministry of Finance procrastinated.
Published by Globes [online], Israel business news - www.globes-online.com - on November 27, 2008
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