The Governor of the Bank of Israel, Professor Stanley Fischer, at the Annual Meeting of the Association of Banks held today in Tel Aviv

24.11.2005

The Governor of the Bank of Israel, Professor Stanley Fischer, at the Annual Meeting of the Association of Banks held today in Tel Aviv:

"It is vital that the next government be committed to the same macroeconomic strategy and continued structural reforms that created the conditions for healthy and sustained growth."

"Strengthening competition in the banking system is one of the prime objectives of the Bank of Israel and of every government in Israel."

"It is vital that the next government be committed to the same macroeconomic strategy and continued structural reforms that created the conditions for healthy and sustained growth. Domestic and foreign investors must be sure even now that this strategy is not at issue, and that everyone is committed to it. The Bank of Israel will continue to pursue an interest-rate policy consistent with the inflation target of between 1 percent and 3 percent a year, with the intention of reaching the mid-point of the target." This was stated today by Professor Stanley Fischer, Governor of the Bank of Israel, at the Annual Meeting of the Association of Banks in Tel Aviv.

The Governor pointed out that this strategy cerates the conditions needed for long-term growth, without which the problems facing the economy, and in particular the problem of poverty, cannot be tackled.

Relating to the economic growth that Israel is currently enjoying, the Governor said that although it is benefiting from global growth, it is also the outcome of the government's macroeconomic policy in the last few years, expressed in fiscal discipline-in accordance with the fiscal targets it determined-and in a series of reforms (in the labor market, the capital market, the ports, etc.), privatization (of banks, and companies like Bezeq and El-Al), and investment in the infrastructure (for example in the railway system). Another aspect of the same strategy is the monetary policy pursued by the Bank of Israel, which focuses mainly on maintaining low inflation in line with the government's target.

In his address the Governor stressed the importance of competition in the banking industry, and said that " strengthening competition in the banking system is one of the prime objectives of the Bank of Israel and of every government in Israel"

The Governor stated that as long as there is no increase in the number of large banks-whether through the merger of small and medium banks or through the entry of foreign banks into the field of full retail banking in Israel-the Bank of Israel will have to continue examining ways of removing the barriers in this area.

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