Joint Prime Minister's Office-Finance Ministry Statement on the New Draft
Bank of Israel Law
(Communicated by the Prime Minister's Media Adviser)July 02, 2009

Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz will,
on Sunday, 5.7.09, submit the draft Bank of Israel law for Cabinet approval.
The law is due to specify the main areas of activity for the Bank, with
emphasis on its goals, strengthening its independence and assuring
transparency in its modus operandi.

The Bank of Israel and the Finance Ministry have - for some time - been
working on the main provisions of the law and have recently concluded work
on most of the subjects included in the draft law.

In recent weeks, on instructions from Prime Minister Netanyahu and with the
mediation of Prime Minister's Office Director-General Eyal Gabai, senior
Finance Ministry and Bank of Israel officials have met to discuss the last
outstanding issues. Following a decision by the Prime Minister, the draft
law will be submitted to the Cabinet on Sunday. The Cabinet's decision will
be a significant and important stage ahead of the end of the legislative
process for the new Bank of Israel law.

While the draft law ensures the independence of the Bank of Israel, it also
demands transparency and allows for better oversight of Bank decisions.

According to the draft law, a six-member monetary committee, composed of
three Bank and three public representatives, will be established to set
monetary policy for the State of Israel, including interest rates. An
administrative council will also be established to approve the Bank's annual
work plan and budget; most of its members will be public representatives.

The law also includes an oversight mechanism - decided upon by Prime
Minister Netanyahu last week - for the salaries of Bank employees.

The current Bank of Israel Law is from 1954 and except for minor changes has
not been amended to fit either the current economic reality or the functions
and responsibilities of central banks around the world.

Legislating a new Bank of Israel law has been on the public agenda since the
1990's. Upon taking office, Prime Minister Netanyahu instructed that the
preparation of a new Bank of Israel law be completed as quickly as possible
in order to provide the Bank with the tools to conduct a modern monetary
policy such as takes place in the leading countries of the world.