Governor of the Bank of Israel in an economic review at the Finance Committee/Knesset Speakers
"Irresponsible behavior on the part of members of the Knesset could create a risk of an attack on the banks (what is known as a 'bank run') and all of economic history proves this," Bank of Israel Governor Prof. Amir Yaron warns in an interview.
The Governor refers specifically to discussions held recently in one of the Knesset committees.
The governor: "This is a very serious move that could harm the Bank of Israel's independence and financial stability. The committee headed by MK Ohad Tal from the religious Zionists demands that unsupervised entities be allowed to receive deposits.
" Competitive considerations must be considered.
This is a problematic proposal that harms the independence of the monetary committee.
The competition issue is not relevant and there is no chance of changing the banking structure in this way.
The proposals only indicate the lack of understanding of those involved in the matter."
In response to the question of how he responds to these proposals, the governor adds: "I am tirelessly busy explaining the strength of the economy.
It is important that the Minister of Finance, who is the chairman of the committee who belongs to his party, take this into account and not allow the promotion of moves that harm the Bank of Israel and the Israeli economy."
Yaron
"The high inflation mainly hurts employees"/Reuters
Regarding the downgrading of Moody's credit and the fear that other rating companies such as Fitch or S&P will downgrade it, he says that "the Israeli economy is based on solid and healthy economic foundations that allow for strength and stability. It knew how to recover after quite a few difficult periods in the past and quickly return to prosperity. Downgrading Moody's credit was determined mainly due to the uncertainty regarding when and how the war would end.
"When Moody's downgraded the rating, we didn't see a reaction in the markets because the downgrade was already priced in.
But the economic price of downgrading is the ability to grow quickly and restore the rating to its high level.
This will require much more difficult work and will have a high price."
According to the governor, "in order to restore the credit rating, it is clear that larger structural changes must be made that have not been handled properly.
Unfortunately, what has not yet been carried out are those structural changes which, although they will not have an impact in the coming year, are critical to the continued high growth in the coming years and the return of the high rating of the economy."
Regarding the question of whether the Israeli economy is prepared from a budgetary standpoint for the expansion of the war to the north, he adds: "On the subject of the war on the northern front, there is a lot Subscenarios.
It is clear that the northern front will be an economic burden.
At the same time, our forecasts take into account a southern front with some activity in the north, but not full military activity."
On the Treasury's proposal to impose additional taxation on excess profits in banks, Prof. Yaron adds: "Sectoral taxation on banks alone is not economically correct.
One can understand the need to maintain the budget framework, but not in this way.
If we are going to tax it, it is highly desirable that it does not apply only to the banking system."
A natural solution
This is how you will improve performance and pleasure in bed - with an exclusive sale
in collaboration with "Gabra"
MK Ohad Tal. "The proposals only indicate the lack of understanding of those involved in the matter"/Knesset Spokesperson, Noam Moshkowitz Knesset Spokesperson
Regarding his surprising decision from this week to leave the interest rate unchanged, which will increase the burden on households, mortgage borrowers and small businesses, he explains: "The Bank of Israel has initiated a number of measures, such as extending the deferral of payments on loans to small businesses and people in the reserves. But the high inflation mainly affects employees. Inflation is on a shrinking trend and interest rate cuts during the year will be done in a measured and careful way."
Regarding what is expected in the housing market, the Governor says: "We fear the continued increase in rental prices due to the uncertainty arising from the war and its consequences. The restrictions on hiring workers in the construction industry may affect rental prices and over time increase inflation.
"The housing market has a lot of weight in economic activity.
The security situation resulted in damage to the construction industry due to a lack of workers.
The supply limitations in the industry and the need for alternative housing for evacuees may affect the continued rise in prices in the housing market and this is one of the risk factors."
More on the same topic:
Amir Yaron
Bank of Israel
Bank of Israel Governor
Moody's
Credit Rating
credit rating
Bezalel Smotrich
banks
inflation
Bank of Israel interest rate
rent
housing
War of Iron Swords
Gaza war