Prime Minister Benjamin Netanyahu decidedto side with Finance Minister Yuval Steinitz in the Treasury and the Bank of Israel "fight" over the control of the central bank employees' wages.
The prime minister declared that Bank of Israel employees' wages are to be supervised by the Treasury, as all other State and public sector wages are.
Bank of Israel Governor Stanley Fischer recently accused Steinitzof waging "war" on the bank's authority to make monetary policy decisions. Netanyahu's decision may cause Fischer to announce he will not be seeking a second term as head of the Bank of Israel.
Fischer has made adamant statements regarding the Bank's need to remain "completely independent," the wage monitoring being a prerequisite for its autonomy.
The Treasury, on the other hand, says that the central bank employees enjoy unparallel benefits, unheard of in government bureaus, which is why it wants its director of wages to supervise the Bank.
Netanyahu ordered Steinitz, Fischer and Eyal Gabai, the Prime Minister's Office's director-general, to try and formulate a compromise acceptable on all sides by next week, in order for the Treasury to present the amendments to the Bank of Israel Act – the negotiations on which were halted due to the Steinitz and Fischer's disagreement – before the Knesset.
However, a senior Bank of Israel source said that Fischer would probably opt no to continue on as governor. Fischer's term in office is due to come to an end in 10 months.