) countries about the support those countries will make available to help stabilize the markets in europe – was unimaginable a mere 15 years ago. the global slowdown has implications for israel ’ s economy. interest rates in the major economies are expected to remain low for several years, and this will affect israel ’ s monetary policy. the slowdown has a direct impact on the demand for israel ’ s exports. the situation in europe is likely to have a negative effect on financial stability there, and hence on global financial stability too. this concern has already been reflected in the price of bank shares in israel. nevertheless, israel ’ s economy has reached this situation in a good condition : gdp has grown at good rates in the last several quarters, and unemployment is at its lowest level in about 30 years. the exchange rate of the shekel against the dollar has weakened in the last few months, and is expected to help exports. the trends in the current account are changing : after growing accustomed to a surplus in the last few years, we now expect the current account to be more or less balanced next year. israel ’ s economy can certainly exist in the environment of a balanced current account, but it is a new situation with which we must familiarize ourselves. the interest rate in israel is higher than those in the large advanced economies, and there is space for an interest rate cut should the need arise. bis central bankers ’ speeches israel ’ s economy received a well deserved recognition for its successful achievements in the last eight years, expressed by the recent improved credit rating. in the statement accompanying the revised rating, the rating agency stressed israel ’ s robust budget policy and wise monetary policy, as well as the determined supervision of the banking system. nonetheless, the statement also emphasized the threats on the horizon, and we must continue to adhere to the correct policies that will justify the higher rating we have been afforded, and persist in supporting the economy ’ s strength in the future. the issues that led to the outbreak of the recent demonstrations and to the formation of the trajtenberg committee are serious ones, and reflect serious problems in israel ’ s economy. many of the issues relate to the high cost of living. professor manuel trajtenberg is an excellent economist, and he is experienced in formulating policy recommendations. his appointment as head of the committee was an excellent decision, as was his choice of the other members of the committee to work with him, including, of course, the deputy governor of the bank of israel

what happened in 2008. in some respects, there is a similarity - now, like the eve of the crisis of 2008, we are seeing negative scenarios in the global economy, but we don ’ t know if they will develop to the same level of severity as in 2008. in any case, we are refreshing the policy tools and the scenarios which we faced in 2008, but we must take into account that the next crisis, if it happens, will not be identical to the previous one, and we will need to adjust the policy response where necessary. i would like to raise two points in conclusion : the first point relates to the discussions regarding concentration. a lot is said about the people described as “ tycoons ”. it should be remembered that the “ tycoons ” are acting within the existing legal framework, and they have done nothing criminal. referring to them as bis central bankers ’ speeches people who have committed a crime is populistic – a populism which is easy in the short term, but dangerous in the long term. the second point is that the economic reality in the near future will not be simple. with that, the israeli economy is in a strong position, and we have the ability to deal with the reality which we face. it is important that we continue to take responsible policy steps as we prepare for this encounter. a happy and sweet new year! bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches