Remarks by the Bank of Israel Governor at the Knesset Finance Committee
The Governor emphasized the importance of opening businesses and the economy, while stringently adhering to the guidelines such that morbidity levels will not rise. He reviewed the situation of the labor market, and noted that removing restrictions will immediately increase the level of economic activity, and will lead to improved unemployment data. Among other things, he noted that the COVID-19 crisis has caused great harm to young people and the elderly, and that professional retraining courses must be arranged to avoid the loss of many work years. The Governor emphasized that the unpaid-leave model used at the start of the crisis was appropriate at the time, and that the model must now be made more flexible in order to allow for a return to the labor market through various paths.
In conclusion, the Governor discussed the tremendous uncertainty that is characteristic of the crisis, and the increase in the economic risk level. The Bank of Israel is making broad use of the tools at its disposal, some of which in an unprecedentedly large manner, in order to minimize the damage to households and small businesses and to help them get through the situation. As part of this, the Bank of Israel is constantly examining additional measures, while examining and learning from the measures adopted by other central banks. In our view, the measures must be adopted intelligently, with an emphasis on maintaining the stability of the banking corporations where the public’s money is deposited.