Navigate to News section

Second Bank of Israel Chief Nominee Opts Out

Economist Leo Leiderman withdraws his candidacy over privacy concerns

Romy Zipken
August 06, 2013
Leo Leiderman.(Ariel Jerozolimski/Bloomberg)
Leo Leiderman.(Ariel Jerozolimski/Bloomberg)

Last week we reported that Leo Leiderman, a professor and Bank Hapoalim’s chief executive, was chosen by Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid to become the next Bank of Israel governor. His nomination came after the front-runner, Jacob Frenkel, withdrew his candidacy.

It seems like some bad luck for Israel because over the weekend, Leiderman bowed out as well, telling the Prime Minister he didn’t want the publicity that would come with the title, Reuters reports.

“After holding intensive discussions with his family over the past two days, he has decided that he would prefer to continue to work as a private person at Tel Aviv University and at Bank Hapoalim,” said a statement released on his behalf.

Acting governor Karnit Flug, who was endorsed by former governor Stanley Fischer, and served as deputy governor for two and a half years, announced that she would resign from her post after she was overlooked for the position, the Times of Israel reports.

Following Leiderman’s withdrawal, opposition chief Shelly Yachimovich urged Netanyahu and Lapid to visit the house of acting replacement Flug, apologize to her, and “implore her to take on the post of Bank of Israel head.”

With two candidates out in under a week, economists worldwide have become nervous, writes David Shamah in the Times of Israel. Economists like stability, he explains, and this “saga” is quite unstable. Signs of that were seen immediately:

Israel’s five-year credit-default swaps (a sort of insurance that investors pay in order to protect themselves from a default) rose. The increase was relatively small — 0.66 basis points (the premium is now 111.66 basis points, or about 11% of the value of the bonds Israel is selling on international markets), indicating that investors are slightly more nervous about the safety of investments in Israel.

Shamah explains that the situation could worsen if there isn’t a leader appointed soon. Netanyahu and Lapid are allegedly looking to nominate Eugene Kandel, director of the National Economic Council. But, “it’s not clear” if he wants the gig. We will keep you posted.

Romy Zipken is a writer and editor at Jewcy. Her Twitter feed is @RomyZipken.