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Flug: Challenges Abound for Bank, Economy

The new Governor of the Bank of Israel, Karnit Flug, said she appreciated the vote of confidence the country's leaders had given heR
By David Lev
First Publish: 10/21/2013, 12:14 AM

Dr. Karnit Flug
Dr. Karnit Flug
Photo: PR

The new Governor of the Bank of Israel, Karnit Flug, said Sunday night that she appreciated the vote of confidence the country's leaders had given her by choosing her for the job. “I want to thank the Prime Minister and Finance Minister for their faith in me,” Flug said at a press conference Sunday evening, hours after the government voted her as the new Bank chairperson.

"We were impressed by Dr. Flug's performance as head of the Bank of Israel over the past months, and are certain she will help us march Israel's economy to further achievements in face of the global economic upheaval," Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid said in a statement.

Former BOI head Stanley Fischer, with whom Flug had worked for many years, said that Flug was a “worthy choice. I know it was a difficult decision for the government, but I also know that they were searching for the best candidate. Karnit was a central figure in many important BOI decisions, which makes her very qualified for the job.”

Commenting on her having been chosen as Governor, Flug said that she, the Bank, and the Israeli economy faced “great challenges. I am sure that together with the dedicated and hard-working members of the BOI we will meet these challenges.”

Flug beat out several other candidates for the job, including former Argentinian Central Bank head Mario Blejer, former BOI Deputy Governor Zvi Eckstein, and retired Finance Ministry official Victor Medina. Blejer was considered the front-runner for the job, after leading candidate and former BOI head Jacob Frenkel decided to drop out of the running, after he was accused of shoplifting an item from a duty-free store in the Hong Kong airport. Frenkel attributed the incident to a misunderstanding, but decided not to pursue the job anyway.

Also dropping out of the race was Leo Leiderman, Bank Hapoalim's chief economist. He did not give a reason for his decision. The job was reportedly offered last week to former U.S. Treasury Secretary Lawrence Summers. Who turned it down as well.