Former Bank of Israel deputy governor Prof. Zvi Suzman said, "Many countries are drawing conclusions and are discussing imposition of short term capital movement restrictions. Israel must also draw the correct conclusions."
Financial turmoil on international markets necessitates more cautious reasoning in the field of foreign currency deregulation regarding the movement of capital, former Bank of Israel deputy governor Prof. Zvi Suzman told "Globes" today.
Suzman said that many countries are drawing conclusions from the prolonged financial market crisis and are discussing the possibility of imposing short term capital movement restrictions. Israel must also draw the correct conclusions from this crisis."
Suzman added that Israel is evidently also very vulnerable to shocks on international money markets, despite the measures of restraint imposed to reduce inflation and budget deficit. The measures did not prevent large investors, particularly foreign ones, from taking cautious steps and withdrawing funds. However, there must not be irresponsible policy regarding inflation and the budget, so that the economy will be able to withstand external shocks.
Suzman stressed that he opposes a restrictive policy on the budget and interest rate, and warned against focusing economic policy on price stability and balancing the budget while ignoring the key targets, such as employment and growth renewal.
Published by Israel's Business Arena October 13, 1998