Karnit Flug back in running for BOI governor

Following lengthy selection process that included two failed nominations, prime minister, finance minister to announce new Bank of Israel governor by Sunday. Karnit Flug, currently acting governor, reportedly back in running

Moran Azulay|Published: 10.19.13 , 23:58

Over one hundred days with no Bank of Israel governor are expected to come to an end, as Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid are scheduled to announce their choice for new governor of the Bank of Israel by Sunday, the Finance Ministry said.

On Wednesday, Netanyahu and Lapid held a two-hour meeting without reaching a decision, according to Lapid's spokeswoman. Once a final decision emerges, it will end a lengthy selection process that included two failed nominations.

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Former finance minister, MK Meir Shitrit, addressed the extensive process last week, saying "It's wrong to leave the country without a governor for so long; it bears consequences on the economy. The governor plays a key role in determining interest rates and exchange rates."

Previous central bank governor Stanley Fischer stepped down at the end of June after eight years in the job.

His deputy, Karnit Flug, currently acting governor, had said she would step down once a new appointee is in place, but is reportedly back in the running.

Other than Flug, candidates who have been approved by a vetting committee are former Argentinian central bank president Mario Blejer, former Bank of Israel Deputy Governor Zvi Eckstein and former Mizrahi-Tefahot Bank Chief Executive Victor Medina.

Much uncertainty has been created by the vacuum left by Fischer, a world-renowned economist who brought much prestige to the Bank of Israel.

Netanyahu and Lapid initially chose Jacob Frenkel, Israel's central bank governor in the 1990s and currently the chairman of JPMorgan Chase International, to succeed Fischer, but he pulled out following reports that he was arrested on suspicion of shoplifting at Hong Kong's airport in 2006.

The charges were later dropped.

A second candidate, Bank Hapoalim Chief Economist Leo Leiderman, also dropped his bid two days after his nomination, citing personal reasons.