Listen to the Governor

The Dankner affair shows that we should listen to Bank of Israel Governor Stanley Fischer.

Bank of Israel Governor Stanley Fischer has been responsible in the past two years for purchasing tens of billions of dollars in foreign currency to try to prevent the shekel from appreciating against other currencies. Economists are fiercely divided over whether Fischer's policy is wise, and some doubt his power to check the market forces that are driving up the shekel.

There is no certainty that Fischer's policy will succeed. But he certainly has the pluck to make such a move, as well as a broad view of our economic problems - in this case the dire implications of a strong shekel on exporters' profits. He is aware of the bank's responsibility to respond to these problems.

Fischer's broad view was also reflected in his backing for Supervisor of Banks Roni Hizkiyahu's decision to dismiss Dan Dankner from his position as chairman of Bank Hapoalim. Hizkiyahu did not give his reasons for doing so. Fischer insisted on keeping the reasons secret, apparently worried that exposing them might damage Hapoalim's reputation.

Fischer was criticized for this and accused of arbitrary conduct. Bank Hapoalim's controlling shareholder, Shari Arison, even called the governor's behavior "McCarthyism." In retrospect, in view of the suspicions raised against Dankner and his arrest on Wednesday on suspicion of paying bribes, it appears that Fischer's position and his doggedness were justified and served the public interest.

Fischer continued on this tack this week in daring to speak out about two complex public issues. "Senior managers' wages are too high, this problem must be dealt with urgently," he said, presenting the Bank of Israel's annual report. But he ignored the excessive wage problem at the institution he heads.

The report outlines the bank's position on another problematic issue - the economy's extreme centralization. This means that huge power is held by a few tycoons who control many companies, including financial firms.

Fischer did not hesitate to make harsh statements about Israel's large holding companies. He said they are too big and endanger Israel's economic stability. He hinted at improper connections between those companies and the banks, and among the corporations themselves, implying that these giant corporations are damaging competition.

He said that some of those corporations are managed based on the whims of individuals who have no worthy heirs. Fischer concluded that action must be taken to restrict the large companies' activities and at least prevent them from controlling banks and insurance firms.

Both these issues - senior managers' wages and Israeli tycoons' status - are out of the Bank of Israel's jurisdiction.

But Fischer found that these issues are clouding Israel's economy, so he thought it his duty to intervene and express his opinion publicly. The Dankner affair shows that we should listen to the governor.