Bank of Israel Governor Takes the Stage with a Clear Message and No Paper Tissues
On Tuesday, Amir Yaron and his team held a press conference to discuss the ongoing coronavirus crisis, stating that “without healthcare, there is no economy, but without the economy, there won’t be healthcare”
Omri Milman | 14:41 25.03.2020
On Tuesday, Bank of Israel governor Amir Yaron and his team held a press conference to discuss the ongoing coronavirus (Covid-19) crisis, stating the bank’s topmost goal is “to support the economy and society, to help society reach the day after. Without healthcare, there is no economy, but without the economy, there won’t be healthcare.” The bank’s press conference was so balanced and normal it seemed almost out of place. In recent weeks, Israelis have become accustomed to dramatic, not to say apocalyptic government press conferences. These (almost) nightly events frequently end with some government official demonstrating the correct way to use a paper tissue. Yaron, in comparison, used his screen time to provide a clear analysis of the country’s economic situation, offer forecasts and numbers, and even hold a Q&A session at the end. It felt like a rare moment of sanity. signed off on the night between Tuesday and Wednesday, but Yaron estimated that their implementation could increase the damage to NIS 69.2 billion (approximately $19.04 billion), 4.9% of GDP, if they last through April, and to NIS 126.8 billion (approximately $34.67 billion), 9% of GDP, if they last through May. The new restrictions are currently in place for a seven-day period. The bank also recently launched an unprecedented plan to bolster the currency exchange market with NIS 15 billion (approximately $4.12 billion) and buy government bonds worth NIS 50 billion (approximately $X billion) on the secondary market—for comparison, during the 2008 crisis the bank spent NIS 18 billion (approximately $5.52 billion at the time) on bonds. The most significant step taken by Yaron, though, is that he held back and did not take all of the measures at the bank’s disposal, though he has stated he might do more as time goes by. Bank of Israel officials who had been with the bank during the 2008 financial crisis told Calcalist on condition of anonymity that this was the right tactic then and will prove to be the right approach during the current crisis as well. The Bank of Israel is taking a different approach than the U.S. Federal Reserve, which has declared its willingness to buy financial assets at any sum and is using each and every tool in its arsenal. The coronavirus crisis, like every big economic crisis, is rife with uncertainty. No one knows when and how it will end, and how the economy will look the day after. That is why the financial system is thirsting for a clear and calm voice. Finance ministry officials have previously accused Moshe Bar-Siman-Tov, the director-general of the health ministry, of “committing acts of terrorism” against the economy. Whether this is true or not, the finance ministry should do more to calm the public. One of Yaron’s initial weaknesses was his lack of experience in such a powerful position. Now, his inexperience is proving an advantage, as he falls back on his vast history as an economist and approaches the crisis in an analytical, calculated, and impartial way. What will eventually determine the amount of damage to the domestic economy as well as how fast it will bounce back is the scope and the pace of the action taken by the government—be it via direct budgets awarded to relevant entities or via overall financial infusion. As it stands, the interim government is still struggling with making decisions that have approval across the board, which only contributes to public panic and increases public mistrust.