advanced stage of preparation, after a long period of working vis - a - vis the ministry of finance and the prime minister ’ s office, and the government has adopted the principles we formulated. the proposed law is appropriate for a modern economy, with decision - making processes and mechanisms that ensure transparency and internal and external controls suited to an independent central bank operating in a democracy. the new law will define the aims of the bank more correctly and accurately, with the maintenance of price stability as its top priority. the independence of the bank in the use of the instruments to implement its policy will be clearly specified, and a new mechanism will be instituted for decision making regarding the interest rate policy and the management of the bank. two new bodies will be established : ( 1 ) a monetary committee headed by the governor, whose members will include people from outside the bank with the appropriate professional background and with no potential conflicts of interest ; ( 2 ) an administrative council that will act as the bank ’ s board of directors, with a majority of members from outside the bank, one of whom will serve as chair of the council. the council will approve the administrative aspects of the bank ’ s operations, including work plans, the bank ’ s budget, and salaries. the decisions of the monetary committee and the administrative council will be transparent to the public, the knesset, and the government. to conclude, i would like to express the hope that the bank of israel will be able to continue with the goals we have set ourselves, and that we will soon present to israel a central bank that will enjoy the continued confidence of the public not just in its professionalism but also in the legal and administrative framework in which it operates.

karnit flug : the formulation of long - term economic policy – strategic thinking about challenges to the economy remarks by dr karnit flug, governor of the bank of israel, to the eli hurwitz conference “ the formulation of long - term economic policy : strategic thinking about challenges to the economy ”, tel aviv, 25 may 2016. * * * per capital gdp in israel is about 40 percent lower than that of the us. according to a study conducted by the oecd, in a “ business as normal ” scenario – relaying on the existing trends regarding the development of factors of production and productivity in israel and around the world – the gap is not expected to be closed in the next few decades. this is the nonencouraging point of departure. given that this is not sufficient, we need policy aimed at achieving long - term goals, based on the formulation of a strategic plan in key areas and its actual implementation. this plan must be based on an assessment of the situation at the point of departure, and of the trends and forces that the plan will need to take into account : projected demographic trends, the unpredictable geopolitical situation, and the global environment – which is expected to be far less pleasant than it was in previous decades. all of this must also be analyzed in view of the current state of the fiscal aggregates, including the level of public debt, the level and composition of public expenditure, and the tax system – rates and composition. based on these trends and forces, we can assess the main challenges with which the strategic plan will need to deal. the demographic trends are among the fundamental factors that policy makers must take into account in formulating strategic plans in main policy areas. the combination of an aging population – the elderly population is expected to grow from 10 percent of the total population to 17 percent in the next four decades – and a significant decline in proportion of the working age population, alongside an increase in proportion of the population groups that tend not to participate as much in the labor force ( there are expectations of a marked increase in proportion of the ultra - orthodox population and a moderate increase in proportion of the arab population ), require preparation in almost all areas in which government policy operates. to illustrate, i would like to provide a brief overview of some of the implications of these trends for two key areas in which the formulation and implementation of a broad strategic plan is required – the area of healthcare and long - term care, and the area of human