given that this role has been defined in the original boi law from 1954 as one of the main responsibilities of the boi and its governor, the basic infrastructure of knowledge and highly professional staff, and reputation has been built at the boi to serve this responsibility. i also believe that the credibility of the central bank is enhanced, not damaged, by the quality research and policy recommendations it provides. in that regard, it may even contribute to the public support of an independent central bank. and as to friction between the central bank and the political system, during my term it was in fact most intense around issues related to the core activity of the bank of israel in supporting financial stability. the quest for enhancing competition in the provision of financial services, which we all share, led to heated debate as to the scope, the speed and the specifics of the financial sector reform. it centered around our insistence on ensuring that the reform does not undermine financial stability that was sometimes taken for granted by our partners in the design of the reform. in the past, the friction was most intense regarding the disinflation process, and jacob frankel who sits here, can certainty testify to that. so, we ’ ve had frictions in the past and will probably have them in the future, and we should be able to withstand them. we should provide a quiet, behind closed doors policy advice in some cases, and contribute to a better - informed public debate on key policy questions. i believe that within the current political context, where policies tend, more than in the past, to focus more on short term benefits and ignore longer term risks and costs, it is essential that an independent well regarded institution provides solid policy analysis and advice, and helps explain this to the public. so, i believe that retaining the economic advisory role by the central bank in the 2010 boi law has served the country well. in the second part of the conference, we have heard an extensive discussion of the panel of very distinguished speakers on monetary policy and inflation targeting in the post gfc era. thus, i feel it will be somewhat ambitious on my part to try to add to this extensive discussion. the only thing i would like to say is that monetary policy making in israel over the last 5 years that may have seemed boring at times to bystanders, has in fact been a fascinating journey to those involved in making it. early on, we reduced the interest rate to 0. 1 % — a record low for israel, a

move that won me the title of “ the most surprising governor in the world ” according to one of the international news wires. later on we had prepared to use unconventional policy tools, an option that eventually we decided not to use in light of the solid growth, healthy developments in the labor market, and the assessment that the low inflation was not reflecting weakness of demand but rather, at least in 2 / 3 bis central bankers'speeches part, the result of positive processes such as the intensifying of competition. during this period we have also introduced some changes to the mp communication strategy : for example, we launched a quarterly press briefing following rate decisions, and made use of forward guidance. we have also made use of fx intervention, in times mildly, and in times intensively, according to our assessment of the nature of fx fluctuations. each policy decision followed a very thorough and deep discussion, and although many times the debate got heated, and sometimes disagreements arose, i was always sure that every member of the mpc had only the best interest of the israeli economy in his or her mind. now, following almost 4 years of keeping the interest rate at 0. 1 %, it seems as if the era of gradual normalization is approaching. i can already visualize the heated debates that are likely to take place within the monetary committee as to the exact pace and path that this process will take. the committee ’ s challenge will be to move not too fast, so as not to choke the process of entrenchment of the inflation environment within its target range ; and not too slow so as not to find themselves behind the curve. i assure you i will be watching this process closely with great interest. let me now thank the organizers michel and nadine, for initiating and organizing this excellent conference, and thank all the presenters from the boi as well as our distinguished guests, who came from far away. thank you for the very kind words you said, i am moved and honored by all of this. and thank you all for coming. 3 / 3 bis central bankers'speeches