Stanley Fischer
Photo: Boaz Openhiem
Fischer allays market crash fears
Bank of Israel Governor Stanley Fischer says Israel's economy will not suffer dramatic impact from US market crisis
Bank of Israel Governor Stanley Fischer said Monday that the crisis that hit the US market last week would not have a dramatic impact on Israel's economy.
“There is no liquidity problem in Israel, the market is functioning well. The government has passed the budget, which is a positive factor. In addition, exports are rising, markets are performing well, and there are no problems. I don’t see anything bad in the offing and I see no need for a major intervention by us," Fischer told a Jerusalem press held to allay fears that the market losses in the US could trigger a similar trend in Israel.
“Our investigation has found that Israeli banks are not exposed to the sub-prime market. We’ll continue to manage monetary policy mainly with regard to achieving the inflation target. As for my interest rate decisions, on the basis of information we had at the time, I don’t think we erred. The decisions were correct. We were looking at the inflation target," he continued.
Fischer linked the losses registered on the Tel Aviv Stock Exchange last week to fluctuations in world markets, saying the losses could not have been contained.
"I have called this press conference in light of recent events. Although I don't have a dramatic announcement to make, my goal is to explain how events overseas will affect us. The volatility began, as everyone knows, with the sub-prime crisis," Fischer said. "Once the problems started, it was predictable that there should be losses in the US."
Commenting on these losses he said: "The mortgages should have had a small impact. The problem began because nobody knew who exactly was holding them. The US real estate market will grow, which will affect the global market as well."
Asked about the Bank Leumi tender, which Prime Minister Ehud Olmert is suspected of having fixed to favor a bid by a consortium controlled by a friend, Firscher said: "The Ministry of Finance is responsible for the tender, not us. An investigation is underway, and I will not comment on Accountant General Dr Yaron Zelekha’s remarks yesterday.”
Zelekha said Sunday that Israel should tackle the phenomenon of corruption in the public sector. He added that a source familiar with the Leumi investigation told him that senior government officials tried to bend the government tender for the bank to suit their interests.
