Jacob Frenkel set to return as Bank of Israel head

Frenkel, who was governor of the central bank in 1991-2000, is currently chairman of JP Morgan Chase International.

Jacob Frenkel is set for a second term as governor of the Bank of Israel, Channel 2 News reports. Prime Minister Benjamin Netanyahu and Minister of Finance Yair Lapid have decided to appoint Frenkel, who was governor from 1991 to 2000, to replace Stanley Fischer, who steps down at the end of this month.

Frenkel is known as a macro-economics expert. He received the Israel Prize for economics in 2002, and has served in several prestigious posts on the international scene. He was vice chairman of insurance giant AIG when it collapsed in 2008, but remained in the position. In 2009, he was appointed chairman of JP Morgan Chase International, the international arm of one of the three largest banks in the US.

Frenkel's appointment comes as a surprise, since he was not among the candidates touted as possible successors to Fischer. The leading candidate had been considered to be Deputy Governor of the Bank of Israel Karnit Flug, who was strongly favored by Fischer himself.

Sources inform "Globes" that Netanyahu held a series of meetings with Frenkel in the past few weeks, and exerted great pressure on him to return to head the Bank of Israel. Frenkel notified Netanyahu of his acceptance in the past few days.

Frenkel's appointment is all the more surprising in the light of remarks he made a few months ago at the Herzliya Conference, that he "would not be prepared to serve as a central banker in an environment of zero interest rates". In his previous period at the head of Israel's central bank, Frenkel was assertive of the bank's independence, and oversaw the liberalization of the foreign exchange market in Israel that led to the shekel becoming a fully floating currency. He left under something of a cloud, however, after the State Comptroller found that as governor he had received payments to which he was not entitled. Frenkel returned the payments in question.

Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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