Governor of the Bank of Israel Prof. Stanley Fischer outlined the proposed new Bank of Israel Law in a special press conference that he called today, against the backdrop of what has become a public clash with the Ministry of Finance.
"We had no intention of presenting the Bank of Israel Law to the public before reaching an agreement with the Ministry of Finance and with the government on the final draft of the law, but developments of the past week lead us to clarify to the public unequivocally, and very precisely, the Bank of Israel's stand, including on salary issues."
Fischer said, "The Bank of Israel does not think that we should set the salaries at the bank. That does not appear in the law, and we don't believe in it. Unfortunately, the Treasury does not understand the mechanism we are proposing.
"There is no doubt that the government needs to have the last word on salary at the Bank of Israel, as with public institutions. Therefore, in the mechanism that we propose, if there are any disagreements between the Treasury and the Bank of Israel, then, after a review by a professional committee, the last word will be given to the Prime Minister," Fischer explained.
"It is not preferable for the Treasury to have in its hands a tool to use in any disagreement whatsoever with the Bank of Israel."
Fischer said he wanted to emphasize that "this law is not convenient for the Governor, but is preferable for the good of the economy and the state.
"It limits the Governor in all sorts of ways, including decisions on the interest rate, and in the management of the bank. It does not make things easier on the bank's management or on the Governor, but we proposed it so that the system of management of the bank will be better and the bank itself will make better decisions for the economy."
Fischer also said, "I think that for all the other issues it is possible to reach an agreement with the Treasury within 3-4 hours, except in this area of the wage mechanism, because of the need for intercession by the Prime Minister."
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009