karnit flug : the conduct of economic policy, and the various functions filled by the bank of israel and the government in conducting the policy remarks by dr karnit flug, governor of the bank of israel, at the press conference marking the publication of the bank of israel ’ s 2015 annual report, tel aviv, 3 april 2016. * * * summary the governor of the bank of israel : • accommodative monetary policy helped the economy to deal with a moderate global environment. the reduction of the deficit as well as several other factors supported the continued decline in the share of public debt in gdp, the opposite of its trend in most advanced economies. • the success in dealing with short term challenges, and the reasonable state of the economy relative to the global environment permits an enhanced effort to reduce the gap between israel and other advanced economies in several areas and to prepare the economic infrastructure for the future. • the trends in the global environment and the demographic trends in israel are setting complex challenges for the future, and obligate us to act to change the trends in labor productivity, education, health, and infrastructure, so that israel ’ s economy can fully utilize its potential. • it is therefore important that the government formulate a set of priorities which will allow it to focus on dealing with fundamental problems of israel ’ s economy and society in the long term. • in order to deal with these, the government will have to improve the level of public services, to invest in infrastructures, and to support growth. today we are publishing the bank of israel ’ s 2015 annual report. the report presents an analysis of economic activity in israel in the past year, the economic policy that came to support it, and points of emphasis and recommendations to policy makers for future years. in my remarks today, i will focus on the conduct of economic policy, and the various functions filled by the bank of israel and the government in conducting the policy. it is important to distinguish between policy that acts in the short term, and is intended to moderate economic fluctuations – which economists call “ the business cycle ” – and policy that is geared toward achieving long terms goals. in the short term, policy makers use monetary policy and fiscal policy. monetary policy is focused on maintaining price stability, and on supporting economic activity and employment when there are shocks that moderate them. fiscal policy balances the need to support growth in such conditions with the need to maintain a reasonable deficit and manage the public debt burden over time to

stanley fischer : impact of the global financial crisis on israel ’ s economy address by professor stanley fischer, governor of the bank of israel, to the general assembly of the association of publicly traded companies, jerusalem, 8 december 2008. * * * for more than a year the world has been confronting one of the worst financial crises in over seventy years. this crisis has two phases : the first, financial, and the second, real, in other words a significant slowdown, and possibly even a global recession. both the financial and real effects of the global financial crisis on israel's economy are clearly evident. i would like to stress, however, that israel entered this period in a more favorable state than that in most other countries. on the financial side the crisis is reflected in israel mainly by the fall in prices of shares and corporate bonds, unlike in the advanced and other economies. in addition, the rate of growth declined to 2. 3 percent ( annual rate ) in the third quarter, and it is expected that the slowdown in israel's growth rate will continue, i. e., growth will remain positive, but will slow further, ( to 1. 5 percent in 2009 ), as opposed to a more significant slowdown, or even a recession, in the advanced economies. israel's relatively favorable situation is due to several factors : 1 ) the government's fiscal policy in the last few years was a responsible one. 2 ) the bank of israel ’ s interest rate policy supported financial stability and the ability of the economy to deal successfully with the effects of the slowdown in growth. this, without acting counter to the return of inflation to within the target range. 3 ) a surplus has been created in the current account of the balance of payments. 4 ) israel's foreign exchange reserves are high and rising, as a result of the bank of israel's plan to increase them. 5 ) the levels of growth and employment were high at the onset of the crisis. 6 ) israel's banking system is strong and stable compared with those of the advanced economies. 7 ) israel's capital market did not develop advanced, complex financial instruments whose inherent risk levels are difficult to assess. 8 ) the average debt burden of companies and households is relatively low. the challenge at present is to preserve the economy's relatively favorable position, to take advantage of it to deal with the new situation, and to introduce the measures needed to escape from the period of slowdown without harm