The State of Israel has truly reached the age of maturity. For the first time in 65 years a woman was appointed governor of the Bank of Israel. Why had it not happened before? Are not women in charge of running the household, doing everything from economizing with household resources to managing the financial expenditures? Chazal credit women with instinctive practical insight, binah, a word that also translates as understanding and knowledge. It takes “binah” to serve as an efficient manager of the country’s economy – the true function of the governor of the Bank of Israel.
Who is this Dr. Flug, the woman chosen for this exalted position? Karnit Flug was born in Poland in 1955, and made aliyah with her parents when she was three. Growing to school age, she eventually attended the Hebrew University Secondary School in Jerusalem, ultimately obtaining an MA degree in economics at the familiar university campus in 1980.
Dr. Flug continued her studies at New York’s Columbia University, receiving a Ph.D in economics in 1985. Her thesis’ title was indicative of her future career: “Government policies in a general equilibrium model of international trade and human capital.”
After eight years in New York, Dr. Flug returned home and joined the Bank of Israel’s research department. In 1994 she was appointed research economist at the Inter-American Development Bank, returning to the Bank of Israel three years later.
In 2011, Dr. Flug was appointed deputy governor of the Bank of Israel. In that position, she delivered a lecture at the economic symposium of the Tel Aviv University Board of Governors meeting, and reviewed the trends and challenges faced by the Israeli economy. Dr. Flug noted that Israel’s macroeconomic performance has been relatively good, and it has shown noteworthy resilience in the challenging global environment since the global financial crisis.
Following Stanley Fischer’s resignation as governor of the Bank in June 2013, Karnit Flug was named acting governor. In October 2013, after a number of appointments by Prime Minister Benjamin Netanyahu failed to secure a new Governor, Finance Minister Yair Lapid announced Flug’s appointment. After confirmation by the Prime Minister’s cabinet, Dr. Flug became the first female governor for Israel’s central bank.
The daughter of Holocaust survivors, the 58-year-old is married to Professor Saul Lach, head of the department of economics at Hebrew University. The two met in New York while pursuing their Ph.D degrees at Columbia University. Together they returned to Israel and made their home in Jerusalem. The two live very simple lives with their two children in a modest middle-class apartment building in Jerusalem’s Beit Hakerem neighborhood.
The Bank of Israel’s 700 employees can relax. The soft spoken economist from Jerusalem lacks heroic pretensions, and can be expected to maintain a low profile.
She enters Stanley Fischer’s big shoes with outstanding scholastic credentials. The first woman governor who had previously served as an International Monetary Fund executive and a senior economist in the Washington-based Inter-American Development Bank will be a first class governor of the Bank of Israel.