Bank of Israel Governor Prof. Amir Yaron has sharpened the dilemmas facing Israel and the countries of the world in attempts to alleviate the effects of the coronavirus pandemic while limiting economic damage. Speaking at a press conference in Jerusalem, he said, "Ultimately there is no economy without health but without an economy there will also be no health."
He called on the government to provide a safety net for the economy to cope with the repercussions of the pandemic. He said, "I ask MKs and decision makers to rise above their disputes and quickly approve the plan that the prime minister, minister of finance and his top officials have presented that allows them the flexibility of action required."
For its part the Bank of Israel has offered to lend local institutional investors up to $15 billion from the country's foreign exchange reserves to prevent them buying foreign currency to cover positions in falling overseas markets. In this way, the shekel exchange rate has been kept stable. The Bank of Israel is also implementing quantitative easing by buying up to NIS 50 billion in government bonds to stop the falls on the TASE bond market.
Prof. Amir said, "The global economy and the Israeli economy within it are coping with a large economic crisis, which is different from anything the world has known in recent decades. In many countries in the world, as in Israel, the economy is shut down except for essential industries and services and a large part of the workforce isn't going out to work. It is important for me to stress - we are talking about a crisis originating in a source external to the economy and the date when it will end will depend first and foremost on the ability of the world to overcome the virus. Despite that, correct economic policies, which are not bound by the conventions that were right for large crises of a completely different character, are those that will dictate the pace in which we come out of the crisis and will determine the depth of the damage."
He continued, "Our overriding aim is to support the economy and society so that we can successfully get through the current period and be ready for the day after the crisis."
Supervisor of Banks Dr. Hedva Ber said, "The banking system is sound and strong. For years they have said that I am conservative in my supervision and that conservativeness is now yielding dividends."
Published by Globes, Israel business news - en.globes.co.il - on March 25, 2020
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