Flug, Trajtenberg Said to Be Bank of Israel Candidates

Prime Minister Benjamin Netanyahu’s shortlist to succeed Stanley Fischer as Bank of Israel head includes Deputy Governor Karnit Flug and Manuel Trajtenberg, one of the premier’s former economic advisers, said two people familiar with the appointment process.

Each candidate is to meet separately this week with both Netanyahu and Finance Minister Yair Lapid, one of the two people said yesterday. They both spoke on condition of anonymity because the selection process is confidential. While President Shimon Peres has the formal authority to name the next governor, the appointment is done at the recommendation of Netanyahu’s government.

The post of governor unexpectedly opened in January when Fischer, 69, announced he would leave at the end of June, midway through his second, five-year term. Fischer, a former No. 2 at the International Monetary Fund, said he was stepping down for personal reasons, mostly because his family is in the U.S. and he has achieved many of the goals he wanted to accomplish.

Flug, who headed the bank’s research department for a decade, was chosen by Fischer as his deputy in 2011. Born in Poland, she holds a Columbia University doctorate and is the only woman on the bank’s six-member monetary policy committee. If appointed, she would be Israel’s first woman governor.

Policy Changes

Argentine-born Trajtenberg, 62, a former chairman of Tel Aviv University’s economics department, headed the National Economic Council from 2006 to 2009. Netanyahu appointed him to head a committee to recommend economic policy changes following popular protests in the summer of 2011. He holds a doctorate from Harvard University.

Flug, Bank of Israel spokesman Yossi Saadon and a spokeswoman for Lapid, Nilly Richman, all declined to comment, as did Trajtenberg’s spokesman and a government official who spoke on condition of anonymity because he was not authorized to discuss the matter for the record.

Trajtenberg said in March that he was “honored and flattered” that his name had surfaced as a possible candidate.

Fischer has been credited with helping Israel to weather the global economic crisis better than most developed countries. He told a conference in Tel Aviv yesterday that the state of the Israeli economy was “very good” but “not excellent,” in large part because of a 2012 budget deficit that more than doubled from the original forecast.

Bond Investment

The gap between Israel’s benchmark interest rate and rates in major economies was spurring investment in the country’s bonds, Fischer said.

The benchmark rate of 1.75 percent is “very low,” he said. “Not low enough compared to the international arena. All major economies worldwide -- the U.S., England, Europe and Japan

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