In Fischer's league

Twenty-two years ago, the prospect of appointing Professor Jacob Frenkel as Israel's top banker caused uproar in the Knesset, with MKs besmirching him for having chosen to relocate to Chicago rather than stay in Israel. His supporters countered by establishing a lobby of their own, and vouched for his Israeli bona fides. Eventually he got the job.

Since his departure from the Bank of Israel in 2000, he has assumed various, positions on the world stage, some of them high-profile. But his primary residence has always been Tel Aviv, where he owns a penthouse with a view of the Mediterranean Sea.

When he sits down with reporters, his comments always boil down to one simple rule: When it comes to complex economic matters, trust is paramount.

Frenkel, whose chief expertise is international exchange rates and other currency-related matters, put our economic house in order when he instituted the crawling-band exchange rate regime, which allowed the shekel's value to fluctuate within the confines of a fixed floor and ceiling. With inflation posing a constant threat during the 1990s, this regime was designed to ensure stability and prevent shocks to the system.

At times he and the Finance Ministry were up in arms over that move. Many years have passed and the government has since discarded the crawling band because it was deemed unnecessary (as of 2005), but each side still maintains it was right. Frenkel left the Bank of Israel with his reputation intact, although he still has a chorus of detractors.

The decision to nominate Frenkel for a second stint as governor was the culmination of a painstakingly slow process. The next few days will shed some light on why Prime Minister Benjamin Netanyahu did not settle on a nominee earlier despite ongoing criticism, and whether this was because he was awaiting Frenkel's response. Having already served as Israel's sixth central banker and risen to executive positions at major international corporations, Frenkel, 70, may have wanted to sleep on the job offer for days on end, asking himself whether he really wants to be party to the economic arm wrestling that constantly takes place in Israel. Saying yes, he must have known, would force him to deal with the tough economic challenges from the past year.

Although the economic challenges facing the incoming governor are not the same as those he encountered in the 1990s, the politically charged atmosphere of that era is ever-present.

During his previous governorship, he was often asked to greenlight government decisions and help with their passage. Frenkel is bound to discover that the Israeli public is not what it used to be; it has adopted a much more aggressive posture on economic matters. He will also have to deal with the state budget, which is currently being deliberated in the Knesset, and there is still much more work to be done when it comes to reducing the excessive concentration of wealth in the economy.

In the grand scheme of things, tapping Frenkel makes sense. Finding someone who could fill outgoing Governor Stanley Fischer's shoes is no easy task because of his unique credentials. In the eyes of many business leaders, the mere presence of Fischer contributed several points to Israel's credit rating.

Frenkel's stature is on par with Fischer on the world stage. He will most likely enjoy a warm reception. At the very least, Frenkel will get a fair chance to prove himself. But when it comes to the ongoing power struggles in Israel, grace periods are a thing of the past. Especially when you are back in your old job.

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