Our Governor, Ben

Never before has the Bank of Israel been led by an economist with stature like that of Stanley Fischer. The professor previously served as the vice chairman of the International Monetary Fund, the deputy chairman of the vast financial empire Citigroup, and sports an academic resume studded with achievements to boot. His stature makes no small contribution to the way foreign investors the world wide view Israel.

But without detracting from his eminence by one whit, one should know that last week, we received another governor, who under certain circumstances may be even more central than Fischer. His name is Ben Bernanke and on Wednesday he was sworn in as chairman of the U.S. Federal Reserve Board, in charge of monetary policy at the biggest economy in the world.

Bernanke is highly esteemed in the U.S. and quite a consensus was created around his appointment. He is considered one of the most brilliant economists in the U.S. today.

But he assumes giant shoes, those of Alan Greenspan, the man who ruled the American economic roost for 18.5 years and become the most esteemed economic figure in the world.

Analysts at the World Economic Forum in Davos last week split into two main camps. One believes that the tremendous respect the markets had for Greenspan helped blunt financial shocks during his last decade in power. It will take Bernanke a long time to earn the same respect, so the risk of financial shock has increased.

This camp notes the American tradition of a temblor striking the market a few months after a new governor takes the reins. When Paul Volcker took over in the late 1970s, the treasuries market collapsed. When Greenspan took over, stocks tumbled in the disaster that came to be known as Black Friday. Neither man could avert the crisis, but they handled the aftermath well.

The other camp argues that the legacy of Greenspan and other major central bankers is far more liquid, deeper, and smarter financial markets; stable global prices; so there is no cause for anxiety. But both camps admit that never before have the world financial markets been so liquid.

Stanley Fischer received a legacy from Jacob Frenkel and David Klein: an economy with stable prices, in which most major players have internalized the international rules of the game. If Fischer and Israel's finance ministers manage their affairs properly, then Bernanke will be doing much of their jobs for them.