Governor Amir Yaron's remarks at the opening of the 2019 JEDG forum in Washington
The Governor delivered opening remarks at the conference. Then, as part of the first professional session, which reviewed the Israeli macroeconomy, he reviewed the main recent monetary and macroeconomic developments in the Israel economy and globally, discussed various economic issues common to the US and Israel, and enumerated some of the processes the Bank of Israel has completed during the Governor's first year in office. The Governor's opening remarks are attached.
I am very happy to have the opportunity to participate in these meetings, for the first time as Governor of the Bank of Israel. I saw the interesting and very full schedule, and I am sure that today will be productive for all the participants from both sides.
The recent meetings in the IMF clearly point to more downside risks, and the various projections for growth and trade for most regions have been updated downward. Furthermore, many participants noted that the global uncertainty will make it more difficult to return to better growth prospects. Consequently, the economic discussions, as reflected in these meetings suggest that accommodative monetary policy is likely to stay for longer, yet responsible and growth enhancing fiscal policy is needed to support growth—an area in which there is much room for potential collaborations.
The discussions also dealt with the fundamental technological advancements affecting the banking and financial systems --- a feature providing many opportunities yet with potential new risks. To continue to function in a changing economic environment, and to know how best to move forward in the face of potential crises, we have to speak, think, and breathe innovation—technological, financial, and research-related. To do this best, we have to initiate collaborations, precisely of the type through which we are here today, that assist in creating, exchanging ideas, and promoting joint initiatives—utilizing the comparative advantages of each one of the participants.
I will shortly review the main recent monetary and macroeconomic developments in the Israeli economy, and I will attempt to touch on the lines that reach both Israel and the US in some of the issues. However, at this time I’d like to note, in short, several of the processes that we completed at the Bank of Israel in the first months of my tenure—some of which started in the years before my tenure started.
In the financial area, we are progressing on a reform to promote competition, in full collaboration with the Minister of Finance: We brought online the Credit Data System, which is functioning satisfactorily. A large number of financial entities, including some that are not required to do so by law, have joined the system and begun reporting to it and receiving data from it. We also started off with the separation of two credit card companies from banks, while taking care that the parameters of the separation support the goals of the reform to promote competition in the financial system in Israel. And beyond all this—we granted a license to a new, digital, bank, and we are assisting it so that it can begin operating soon. I am also happy to report that the Financial Stability Committee, which I head, has met several times already and is moving forward with formulating tools and work procedures.
In the fiscal area, we presented the government with a comprehensive and clear analysis regarding the need to carry out fiscal adjustments. In parallel, we presented a plan to improve the standard of living and the productivity in the economy—emphasizing operative policy proposals.
In the research area, in a joint initiative with the IMF, we are developing a new macroeconomic model, which takes into account two areas that previously had not been included in the generally accepted models—the housing market and the financial system. Recall that these were among the main factors in the 2008 crisis. We will use the model for macro assessments, but it will also contribute to the work of the Financial Stability Committee.