thousands of years, certainly since the first central bank was established - that of sweden which was established at the beginning of the seventeenth century - and started printing notes that served as legal tender. until 1985 the bank of israel was not independent, and it had to print money, at the government's request, to finance the government's deficit, with no upper limit ( they called it lending the government money, even if the government did not actually pay it back ). in 1985 - a milestone in israel's economy, with the introduction of the economic stabilization program that significantly lowered inflation, but only to between 15 percent and 20 percent a year, higher than the level in the advanced economies - the bank of israel law was amended, and the government was prohibited from asking the bank to print money for it. this legislative change ( known as the non - printing law ) is the only one introduced since the establishment of the bank in 1954. in contrast to us, many advanced and emerging economies have changed their central bank laws in the last two decades, all moving in the same direction in several major aspects : • price stability was set as the major objective of interest policy. this means that the central bank has full control over the rate at which money is printed, in most cases by means of control over the very short term rate of interest, known as the central bank interest rate, which is the cost of money. in addition, the central bank must help in the area of long - term growth, as long as price stability is maintained. • secondly, the independence of the central bank in its use of the policy instruments to achieve the target was clearly specified. the central bank must have complete freedom to exercise its discretion regarding the various instruments it has available to control the money supply in the economy and thereby to meet the price - stability target. • thirdly, the entity deciding on the central bank's policy was defined - a monetary council comprising professionals who are independent of the business and political establishment. • fourthly, a framework for reporting and transparency of the central bank's policy vis - a - vis the government, the legislature and the public was determined. in this context communication with the public is important as a means of increasing the effectiveness of the policy. in israel, the main target of the bank of israel's interest - rate policy is in the area of inflation, and since the beginning of the current decade it has been in the sphere of maintaining price stability. hence since banknotes

by international comparison, despite the fact that national savings is not low, as we showed in the bank of israel annual report for 2016. therefore, not only are we not close the gap in capital per worker relative to other economies, the gap is even growing. by the way, the investments that increased in 2016 were mainly in residential construction and in the electronic components industry, but not in the other industries, such that the increase in investments made a relatively small contribution to a broad increase in production capacity. a factor that is complementary to private sector investment is government investment in infrastructure. despite some increase in the past two years, the level of this 3 / 4 bis central bankers'speeches investment remains lower than it was at the beginning of the decade. as a result, the stock of capital in the economy is lower than the average in the other advanced economies. exports as a share of gdp also declined in recent years, affected by the weakness in world trade and the strengthening of the shekel. this fact is not harbinger of good news in terms of the dynamics of productivity. in this context, we can examine what happened to labor productivity in israel over time. despite its low level at the point of departure in 1995, its pace of growth was lower than what could have been expected given the fact that in general, the increase in productivity is greater in economies that begin from a lower point, if only because of their ability to adopt technologies that exist in countries at the technological forefront. the fact that the productivity gap has not been closed is particularly disappointing given that growth in productivity in the other advanced economies has also been relatively low in recent years. other than the composition of growth and the insufficient level of infrastructure, i have discussed other reasons for the low level of productivity at various opportunities. the main reasons are unsuitable human capital, as shown by the piaac tests examining the cognitive skills of the adult population in israel — such as problem solving skills in a digital environment — the problem of excessive and inefficient bureaucracy, and the fact that the economy is not sufficiently open to international competition in various aspects, such as the attitude toward competitive supply from abroad or relatively high non - tariff barriers. the question of the implications of growth led by consumption over the long term has been discussed by various international entities in recent years, and the main conclusions from their studies are similar to the analysis we have conducted. such growth tends to be weaker, and it also generally leads to lower future growth. the reason for