David Klein, 65, has a PhD in economics, and is a senior Bank of Israel official, having served so far as Number Two. Klein steers clear of the limelight. In his thirteen years at the bank, however, he has held great influence over economic events, was a key partner in the deregulation of foreign currency, the capital market reform, and the opening up of the economy to competition.
Klein was brought to the bank by Prof. Michael Bruno, and has served as head of the monetary department since 1987. Outgoing Governor Yaakov Frenkel appointed him responsible for monetary policy and the foreign exchange rate. Klein was behind Frenkel's tough interest rate policy.
His relationship with Frenkel is complicated. In 1991-1994 Frenkel was closer in outlook to Avi Ben-Bassat, who influenced his position. At the beginning of 1994, Klein considered leaving the bank due to Frenkel's conciliatory approach to the interest rate. By mid 1994, however, the two acted as a team in a policy which led to a series of interest rate hikes, following which, two senior officials resigned: Dr. Leora Meridor, currently deputy general manager for credit at the First International Bank, and Avi Ben-Bassat, currently Ministry of Finance director-general.
Klein recently had reservations over the Brodet Committee recommendations for regressive taxation of saving schemes and shekel instruments. He is known for his support of the foreign currency fluctuation band on the one hand, and his intensive opposition to interference in foreign currency trading on the other. Klein believes the time has come to implement comprehensive reform of the capital market and pensions, to free the funds' money for the capital market. He also supports far-reaching reform of the bank system. Confrontation on these issues and on others can be expected between Klein and Ministry of Finance director-general Avi Ben-Bassat.
Published by Israel's Business Arena on January 9, 2000