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Daily Israel Report

Frenkel's Return as Israel Bank Chief Meets Opposition

JP Morgan Chase International chairman Jacob Frenkel nominated to be the next governor of the Israeli central bank.
By Rina Tzvi
First Publish: 6/24/2013, 11:27 AM

Jacob Frenkel
Jacob Frenkel
Israel news photo: Flash 90

JP Morgan Chase International chairman Jacob Frenkel was nominated on Sunday to be the next governor of the Israeli central bank, returning to a post he held from 1991 to 2000.

His nomination, however, was met with harsh opposition from Shmuel Slavin, who was the director-general of the Treasury when Frenkel previously held the post.

"I think Frenkel only sees the economy and sees the people less. The policy of high interest rates which he led enriched the rich and made the poor poorer," Slavin said, maintaining that the price the Israeli economy paid for Frenkel's rigid interest policy was too high.

"I'm afraid he will draw the economy backward. [Prime Minister Binyamin] Netanyahu's coalition -- [Economic Minister Naftali] Bennett, [Finance Minister Yair] Lapid and now Frankel -- is such an extreme-right economic coalition that I'm very worried," he continued, expressing his disapproval of the nomination.

Frenkel, 70, will take up the job at the end of the month when former World Bank chief economist Stanley Fischer steps down, the AFP news agency reported.

"Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid have decided to name Professor Jacob Frenkel to the post of governor of the Bank of Israel," a statement said.

In principle, the nomination still needs cabinet approval but that is expected to be a formality.

A recipient of the prestigious Israel Prize, Frenkel has also held top posts at American International Group and Merrill Lynch International.

During his first spell as bank governor, he was credited with liberalizing Israel's financial markets and reining in inflation.

Outgoing governor Fischer, a joint Israeli-US national, earned plaudits for his handling of the Israeli economy in the aftermath of the global financial crisis.

He also oversaw Israel's admission to the Organization of Economic Cooperation and Development in 2010.