Stanley Fischer's courage
Bank of Israel governor's statements regarding strength of Israeli economy show great daring, professional knowledge and a large measure of self-confidence
The Federal Reserve chairman, Professor Ben Shalom Bernanke, took an uncomfortable look at the edgy stock exchanges last Friday and made an unusual move: He announced that he was reducing by 0.5% the interest on the money the US central bank lends to American commercial banks.
Israel's central bank governor, Professor Stanley Fischer, also took an uncomfortable look at the Tel Aviv Stock Exchange, but he knew that he could not take a similar step to that made by his colleague and friend, Ben Bernanke: Israel's interest rates are already much lower than those in the US.
Therefore, while Ben Shalom Bernanke was forced to take action, Stanley Fischer had to make do with words: He called an unscheduled press conference and made a number of brave and binding statements. Indeed, they were exceptionally brave.
When I wrote an article three weeks ago describing what was happening on the world's stock markets as "an adjustment, not a collapse", a journalistic colleague, whom I very much respect, phoned to praise me: Not for my economic analysis but for my "balls". To write what you wrote, he said, takes "balls of iron".
Far be it from me to compare myself to Professor Stanley Fischer, but following his remarks at Monday's press conference, I thought that Bank of Israel governor – if you'll excuse the coarse phrase – has "balls of steel".
Because when the governor of the Bank of Israel, and not some journalist, commentator, analyst or nervous trader makes a public statement, providing a calming forecast, and in such an unequivocal manner, he is taking a huge risk, both personally and in terms of the institution he heads.
The job of central bank governor is the highest and most prestigious position in Israel. On top of this, one must remember, is Fischer's personal reputation as one of the top 10 global economists, a group of people whose words are listened to by all the world's financial decision-makers. It is clear that Fischer would not have said what he said, and how he said it, without first talking to other central bank governors in the US and Europe, and without conferring with American financial leaders.
And so if Fischer has got it wrong, God forbid, then confidence in both Fischer personally and Israel's central bank, will be severely undermined.
One therefore needs no small measure of personal daring, professional knowledge and self-confidence to appear, as Fischer did at Monday's press conference, and make such definitive statements as: A crisis in one part of the American mortgage market does not threaten the American economy; that there is no reason to be concerned by the developments in the fall affecting the world's financial markets; and that Israel is a rock of economic stability.
