Israeli cabinet approves new central bank governor

Israeli Cabinet unanimously approved Dr. Karnit Flug as the next governor of Israel's central bank, the prime minister's office announced on Sunday. Israeli Prime Minister Benjamin Netanyahu wished Flug success and added that, "Israel's economic leadership must continue to advance growth and employment, increase exports and lower housing prices." Flug is considered to be a successor of monetary line drawn by the central bank's previous governor, Prof. Stanley Fischer, an American-Israeli economist who previously served as the chief economist of the World Bank. Israeli government expects Flug to continue with Fisher's monetary policy that kept a low interest rate and struggled to curb the dollar devaluation against the Israeli shekel. Flug served as acting governor of the central bank since Fischer stepped down on June 30, after an eight-year tenure. Flug, 58, would be the first woman-governor of the Bank of Israel. She completed her M.A. at the Hebrew University in 1980 and then pursued her Ph.D. in Economics at Columbia University in New York. In 1984, Flug joined the IMF as an economist. In 1988, she returned to Israel and joined the Research Department of the Bank of Israel, where she worked and published papers on topics related to the labor market, balance of payments and macroeconomic policies. Markets hailed on Sunday the long awaited appointment that ends a three-month-long selection process during which the Bank of Israel had no permanent chief, drawing much criticism of Israel's financial markets. In July, Prof. Jacob Frenkel, chair of JP MorganChase International, had to step down shortly after his nomination, amid allegations involving a shoplifting incident in a Hong Kong airport in 2006. In August, Prof. Leo Leiderman withdrew his candidacy, citing personal reasons.