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. the economy does have the problem of poverty, and this should, indeed must, be tackled responsibly by adopting the necessary measures. but it must be tackled with open eyes, with reality constantly in view, and with a commitment to the strategy of long - term growth. without such growth, problems such as poverty cannot be resolved, and it is therefore essential that economic policy be constantly directed towards the achievement and maintenance of growth. as i stated at the outset, the banking system is very important in every economy, and of course israel is no exception. the importance, however, clearly lies in the banking system being healthy, stable and competitive. i have also mentioned the important, even dramatic, development that affected the financial system as a whole, and in particular the banking system - and that is the reform proposed by the bachar committee. i am pleased to see that the banks, or most of them, are already preparing themselves for this, and sales of provident funds and mutual funds are already taking place, and with some measure of success, so it seems to us. when i see this i am happy that the pessimistic scenarios predicted by some are not being realized. in the past, too, such scenarios preceded successful reforms, for instance in the foreign - currency market. it is natural that concern is felt before reforms and changes, but it must be understood that israel's financial system is in need of additional reforms. it is up to the banking system today, and to a great extent also up to the bank of israel, to prepare itself to confront the new targets it faces in a proper manner : at the top of the list i would put basel ii. the bank of israel has placed high on its list of priorities the preparedness of the banking supervision department to adopt the rules of the new basel capital accord ( basel ii ). this also requires the banking system to organize itself accordingly, and that is no small matter. the second target is gearing up to meet the internal audit standards set out in section 404 of the sarbanes - oxley act of 2002 ( " sox 404 " ). this subject is also high on the priorities of the banking supervision department, and of the whole banking system, and will be for the next two years. i have learned from my experience in citigroup

stanley fischer : a salute to the country on its 60th birthday address by professor stanley fischer, governor of the bank of israel, to the forbes conference, ramat gan, 14 april 2008. * * * in my remarks today, i would like to speak about the special period the israeli economy is currently passing through and what is required from policymakers and the business sector to get through this period of the slowdown in global growth relatively unscathed. the israeli economy is presently confronting a very complex situation. the western world, and especially the united states, is in the throes of a serious financial crisis, which is causing a significant slowdown in growth in the united states, and hence also in europe, and a decrease in the volume of world trade. the israeli economy will also certainly be affected by the slowdown in global growth. this will probably come from two directions : a ) through the influence of the financial markets. even though the financial crisis hardly touched the israeli financial system, it is having an impact. this is seen in price falls in the share market and a rise in the risk premium on the bond market. we can thus expect a reduction in consumer demand due to the “ wealth effect ” – the effect of a fall in the value of households ’ assets on their purchases – and a decline in real investments resulting from the increase in firms'costs of borrowing in the capital market. b ) through the slowdown in israeli exports, in the context of the decrease in worldwide demand, particularly in the united states, and the strengthening of the shekel against the dollar. taking the above into account, the bank of israel's forecast of the rate of growth in 2008 is 3. 2 percent. although this is lower than the rate we have been accustomed to since the middle of 2003, it is similar to the average growth rate recorded in israel over the past 25 years, and is higher than that expected in the developed countries – particularly the united states and europe. in other words, the bank ’ s forecast, in line with that of nearly all forecasters, is that israel ’ s economy will continue to grow at a good pace, despite the difficult times in which the advanced economies find themselves. the question thus arises what the policymakers – i. e., the government, especially the ministry of finance, and the bank of israel – and the business sector should be doing to minimize the harm to the economy. we should emphasize that whatever is done has to be consistent with