The government ignores the appointment of the deputy governor of the Bank of Israel economy

For the first time in the history of the Bank of Israel (the Central Bank), the bank faces an unprecedented situation as the mandate of the deputy governor Andrew Abar will end next Saturday without any government decision on its extension or the appointment of an alternative, according to a report published by the Israeli newspaper Calcalist.

According to the Israeli law, the government is obligated to appoint a deputy to the governor of the Central Bank, but this decision was not even raised on the government’s agenda, and this raises questions about the repercussions of this neglect on the Israeli economy and managing monetary policies.

Ignoring government and serious repercussions

According to Calcalist, I was supposed to extend the mandate of Abeer during the recent government meeting, but the meeting was completely canceled and the issue was not originally listed on the agenda.

And “Calcalist” revealed that the bank’s governor, Amir Yaron, recommended weeks ago to renew the mandate of Abeer, but the implementation of the decision requires the approval of the government. According to the law, “the government must appoint the deputy governor on the recommendation of the governor.”

What is remarkable – according to the newspaper – is that this is not just an administrative issue but rather a legal violation, as the law explicitly stipulates the necessity of appointing a deputy to the bank’s governor. Not to do so puts the government in an explicit legal violation, which raises sharp criticism over the economic management of the state.

https://www.youtube.com/watch?v=t6NEWOPOPUPU

Effect on monetary policy

The Deputy Governor plays a pivotal role in economic decision -making, as he is a member of the monetary committee that determines the price of interest and basic monetary policies. According to the law, the committee can continue to work with 4 out of 6 members, but the absence of the deputy governor reflects a state of institutional instability that may lead to the erosion of confidence in the central bank’s ability to make decisive decisions.

Besides, the deputy governor is a member of the bank’s administrative council, which determines its budget, salary policies and the management of foreign exchange reserves, which makes his absence a dangerous loophole in the bank’s administrative structure. More dangerous, that if the governor cannot perform his duties for any reason, there will be no deputy to take over, which may enter the bank in an unprecedented administrative crisis.

The government ignores the decision

What is surprising, according to Calist, is that the renewal of the appointment of Abeer does not require any complex procedures, as it is sufficient for a quick government referendum over the phone or even through the WhatsApp application, as was done in previous government decisions. However, no step was taken in this direction, which reflects a clear frequency of the government in decision -making, or perhaps intentionally ignored.

But if there is a tendency to appoint a new person instead of Abeer, this decision will take a long time, because the position requires the approval of the Greenis Committee, which is concerned with approving the higher appointments in the country, such as the governor of the central bank, the chief of staff, the chief of police, and the heads of the security services, The importance of this position and the impact of his absence on the stability of financial institutions is highlighted.

The Greenis Committee is an Israeli consulting committee that assesses the appointment of senior officials in the public sector to ensure their integrity and competence, including the governor of the Central Bank and his deputy.

Bank governor is under pressure

This was not the first time that the government has witnessed a procrastination in decisions related to the Israel Bank. Prime Minister Benjamin Netanyahu had tried to replace the bank’s governor, Amir Yaron during the past year. The main candidate at the time was Eve Benamilkh, a professor of economics at North Western University and an expert in financing, bankruptcy affairs, and credit markets.

However, the outbreak of the war after October 7 prevented the implementation of change, as the government realized that replacing the governor during the war could destabilize the Israeli markets and suffer severe damage to the economy.

Ultimately, Netanyahu was forced to extend Yaron’s state last November, although he was seeking to replace him because of his critical stances towards the economic policies of the government. According to the law, the bank’s governor is obligated to provide economic advice to the government, but this consultative role was met with an implicit rejection from Netanyahu, who was not satisfied with Yaron’s recommendations that government spending should be reduced and promoted growth policies.

Criticism

The Bank of Israel stressed in an official statement that the law explicitly stipulates the necessity of appointing a deputy to the governor of the bank, noting that the governor can appoint an interim employee from inside the bank to replace the deputy governor until the government takes an official decision.

As for the Prime Minister’s office, he responded to the increasing controversy, saying: “When the Prime Minister returns from abroad, the issue will be discussed and the appropriate decision will be taken.” But this justification did not calm fears, as experts believe that delaying the decision reflects the government’s lack of seriousness in respecting the financial independence of the central bank.