Oxford Analytica, in its 2006 report on monetary policy transparency in Israel, stated that Israel's overall score of "Compliance in Progress" remained unchanged from the previous year. In its 2001 report (and subsequent update in 2003), the International Monetary Fund (IMF) assessed the consistency of monetary policy in Israel with the Code of Good Practices on Transparency in Monetary and Financial Policies. The report concluded that Israel 'fully observed' most of the principles in the Monetary and Financial Policy Code, while there were minor shortcomings related to the clarity of roles, responsibility and objectives of monetary policy. According to Oxford Analytica, Israel's commitment to monetary transparency is expected to be highly enhanced with the approval of a new Bank of Israel (BoI) Law which was proposed in 2005. A draft of this new law is being discussed by the Ministry of Finance (MoF) and the BoI, which are negotiating a number of specific provisions, including salary agreements. Once these negotiations are over, the Knesset (parliament) should approve the law quickly, given the apparent absence of opposition.

General Overview

In its 2001 report (and subsequent update in 2003), the International Monetary Fund (IMF) assessed the consistency of monetary policy in Israel with the Code of Good Practices on Transparency in Monetary and Financial Policies. The report concluded that Israel fully observed most of the principles in the Monetary and Financial Policy Code, while there were minor shortcomings related to the clarity of roles, responsibility and objectives of monetary policy. The IMF also notes in its 2005 Article IV Consultations with Israel that Israel subscribes to the Special Data Dissemination Standards (SDDS) and is in full compliance of the SDDS's prescriptions for data coverage, periodicity and timeliness, and for the dissemination of advance release calendars. (IMF 2003, p. 3; IMF 2006, p. 1)

In its 2003 report, the IMF concluded that the inflation target and the exchange rate band raised the possibility of potential policy conflicts and the need for government approval, for the use of some policy instruments, could infringe the de facto independence currently enjoyed by the Bank of Israel (BoI). The IMF, therefore, recommended that a new central bank law be adopted that removes the potential conflict between objectives by clearly stating the BoI's price stability objective, protects the governor from removal over policy disagreements, and provides the BoI with full instrument autonomy. (IMF 2003, p. 3)

Oxford Analytica's 2006 report on Israel's monetary policy transparency concludes that Israel's commitment to monetary transparency is expected to be highly enhanced with the approval of a new Bank of Israel (BoI) Law which was proposed in 2005. A draft of this new law is being discussed by the Ministry of Finance (MoF) and the Bank of Israel (BoI), which are negotiating a number of specific provisions, including salary agreements. Once these negotiations are over, the Knesset (parliament) should approve the law quickly, given the apparent absence of opposition. (OA 2006, p. 177)

Although the full draft law is not yet publicly available, a number of its provisions are expected to enhance the transparency of monetary policy operations. For example, an announcement is expected to follow each decision taken by the Monetary Committee (a new body established by the law to conduct monetary policy together with the governor), and minutes of its meetings are expected to be published within two weeks. Anticipating this new requirement, the BoI began publishing the minutes of its Monetary Policy Forum in May 2006. While this move has improved transparency relative to the past, minutes do not yet include information on individual positions for or against changes in the interest rate. (OA 2006, p. 177)

According to the draft BoI Law, put forward by the current central bank Governor, Stanley Fischer, (an eminent IMF and World Bank economist appointed in May 2005), the main BoI objectives would be price stability (through inflation targeting), financial stability and, thirdly and not at the cost of the first two, the promotion of growth and employment. In order to strengthen the central bank's independence, the draft gives the BoI the right to use any monetary instrument it might require. Under the new law, the existing Monetary Policy Advisory Committee would be disbanded, and two new bodies would be formed: a Monetary Committee consisting of three independent members and three BoI members -- including the governor, who will act as chairman and hold the casting vote - and an administrative council for personnel issues. The Monetary Committee would be responsible for decisions on changes in the interest rate. It would publish formalised meeting times and announcements on interest rate changes, as well as the rationale behind any decisions taken. (OA 2006, p. 178)

Since June 2006, a new BoI Statistics and Information Division has been responsible for collecting monetary statistics, and it has started a project to calculate aggregate monetary statistics strictly according to the IMF Monetary and Financial Statistics Manual for reporting based on IMF Special Data Dissemination Standard (SDDS). While the BoI does not provide a pre-announced schedule of data to be released, this is available on the Central Bureau of Statistics (CBS) website. As of 2006, all research working papers are published with an English abstract. (OA 2006, p. 177)

Inflation targeting is the main objective of monetary policy. The 2006 Article IV consultations with the IMF noted thaht headline inflation is likely to stay below the BoI target range for some time but is projected to return toward the midpoint later in 2007. The exchange rate has been appreciating since the Lebanon war and the pass-through, which has been unexpectedly large and rapid, together with moderating energy prices, would push year-on-year inflation below the lower bound of the BoI 1−3 percent target range for some time into 2007. Pressures on wages--which stand about 41/2 percent above last year's level--subsided after the war but would likely intensify again as above-trend growth resumed. Overall, assuming a stable exchange rate and oil prices as well as market interest rates, year on- year inflation would gradually increase toward the BoI midpoint later in 2007. This is consistent with markets' expectations of about 1.4 percent year-on-year inflation for the coming 12 months. The risks around this central scenario for prices are significant but appear broadly balanced. (IMF 2007, p. 8)

Under these circumstances, the BoI, in the 2006 consultations with the Fund, saw some room for monetary policy easing. BoI officials explained that the August 2006 rate hike had been partly motivated by concerns about the potential for capital outflows and a depreciation of the sheqel because of the war. These have not materialized. On the contrary, the exchange rate soon appreciated again, buoyed by capital inflows even during the war. Amid slowing year-on-year headline inflation, moderating wage pressures, and falling inflation expectations, the BoI thus decided to cut rates again by 25bp for November 2006, hinting at one more cut for December, which it has since implemented. (IMF 2007, p. 9)

IMF staff concurred and considered that a fundamental change in the policy stance was not needed for as long as the downside risks to inflation did not grow noticeably. The central scenario was for above-potential economic growth and rising headline inflation in the year ahead and thus a significant addition of stimulus appeared unnecessary, unless the downside risks--notably those related to an exchange rate appreciation--increased materially. The BoI broadly agreed with staff's analysis of the fundamental drivers of inflation and related risks over the medium term, which are significant. Accordingly, it intended to proceed cautiously in changing rates, also because of lingering uncertainties related to the 2007 budget and the geopolitical situation. (IMF 2007, p. 9)

Given that inflation targeting is the main objective of monetary policy, the consultations reported that the BoI was concerned about the frequency with which inflation had been outside the 1−3 percent target range since the adoption of this target. The key reason is the rapid transmission of the volatile exchange rate to domestic prices because housing rent and some other service contracts are typically denominated in U.S. dollars. BoI officials considered that frequently missing the target range might destabilize inflationary expectations. However, the BoI's experience is not unusual among inflation-targeting countries. Also, in the IMF staff's view, it did not detract from the success of the BoI's monetary policy, as evidenced by stable inflation expectations. However, maintaining this performance would require convincing the public that inflation can temporarily be outside the target range while policy is consistent with price stability over the medium term. (IMF 2007, p. 9)

However, IMF staff also thought that publishing an inflation forecast might help anchor inflation expectations going forward but BoI officials were not convinced. Staff considered that the minutes of policy discussions, which have been published since May 2006 and complement the Bank's Inflation Report, were useful for that purpose. However, the report did not include an explicit inflation forecast together with a discussion of technical assumptions and risks, which is unlike standard practice among inflation-targeting central banks in other advanced economies. BoI officials replied that they had published fan charts in some past Inflation Reports and would not rule out doing so again in the future. But their main concerns were (i) the conceptual difficulty of publishing a forecast other than at the mid-point of the target range; and (ii) their inflation forecast record, which would probably be poor on account of the exchange rate. Alternatively, the forecast range would have to be so wide as to be of little use as an anchor. (IMF 2007, p. 10)

In the foreign exchange market, according to its website, the Bank of Israel has adopted a strategy of no direct intervention in the determination of the exchange rate. This means allowing the exchange rate to fluctuate continuously in response to financial and economic changes, i.e., giving expression to market forces-within the limits of the exchange-rate band, whose width is currently more than 30 percent. (BoI website)

Since the beginning of the 1990s, liberalization of foreign exchange control has progressed apace, and Israel's economy is now open to free flows of goods and capital. Changes in the domestic and international economic environment will be reflected by the rate of exchange more rapidly and perhaps more smoothly than in the past. Inflows of private capital have increased markedly in recent years, providing financing for investment, but also obliging policymakers, of both fiscal and monetary policy, to act more responsibly. (BOI website)

The Principles

Clarity of roles, responsibilities and objectives of central banks.

CP

Oxford Analytica (OA), in its 2006 report on monetary transparency in Israel, rates Israel's compliance with this principle as "Compliance in Progress." The International Monetary Fund's (IMF) 2001 assessment indicates that Israel 'largely observes' this principle. In its 2003 update, the IMF concluded that the country continued to observe most principles, but recommended that Israel follow up on the IMF's 2001 recommendation and enact a new central bank law. OA claims that Israel's commitment to monetary transparency is expected to be highly enhanced with the approval of the new Bank of Israel (BoI) Law which was proposed in 2005. A draft of this new law is being discussed by the Ministry of Finance (MoF) and the Bank of Israel (BoI), which are negotiating a number of specific provisions, including salary agreements. Once these negotiations are over, the Knesset (parliament) should approve the law quickly, given the apparent absence of opposition. . (OA 2006, p. 178; IMF 2001, p. 59; IMF 2003, p. 3)

The previous BoI governor, David Klein, came under intense criticism for keeping policy too tight. Partly as a result, the government resuscitated the Monetary Policy Advisory Committee, a government-appointed committee comprised of leaders in the business and academic communities, to discuss policy on a regular basis and advise the BoI and the governor on economic and monetary policy. The committee has no power to decide policy and is viewed as a rubber stamp for the BoI's monetary policies. The approval of the Advisory Committee is not needed to change interest rates. (OA 2006, p. 178)

The laws establishing the BOI clearly distinguish its activities from those of the government. Monetary and fiscal operations are normally coordinated through formal and informal meetings between the governor, the minister of finance, and other senior staff from the BOI and the Ministry of Finance (MoF). The BOI is the official economic adviser to the government. After a difficult year in 2002, when such meetings virtually came to a halt, the ministries increased discussions in 2003; for example, the MoF cooperated fully with the BoI's request for data to feed its macroeconomic model of fiscal policy. However, this was at management level; the rift between the finance minister and central bank governor remained wide. Since 2004, relations and coordination have further improved with a change in officials and in policy, and the current coordination between the BoI and the MoF is good. (OA 2006, p. 179)

Part IV of the current BOI Law details the procedures for appointments, terms of office, and the criteria for removing the heads and members of the central bank governing body. The IMF has recommended that the BOI law should be "amended to strengthen the central bank independence and reflect international best practice regarding monetary policy objectives and procedures, so as to enhance confidence and minimize the risk that temporary breaches of inflation targets could unhinge expectations." Once the new BoI law is passed, which strengthens the central bank's autonomy and targets inflation, these recommendations will be fully met. (OA 2006, p. 179)

According to the draft BoI Law, put forward by the current central bank Governor, Stanley Fischer, (an eminent IMF and World Bank economist appointed in May 2005), the main BoI objectives would be price stability (through inflation targeting), financial stability and, thirdly and not at the cost of the first two, the promotion of growth and employment. In order to strengthen the central bank's independence, the draft gives the BoI the right to use any monetary instrument it might require. Under the new law, the existing Monetary Policy Advisory Committee would be disbanded, and two new bodies would be formed: a Monetary Committee consisting of three independent members and three BoI members -- including the governor, who will act as chairman and hold the casting vote - and an administrative council for personnel issues. The Monetary Committee would be responsible for decisions on changes in the interest rate. It would publish formalised meeting times and announcements on interest rate changes, as well as the rationale behind any decisions taken. (OA 2006, p. 178)

Since the 1980s, when reforms to address the crisis of hyperinflation won the central bank its independence, BoI governors have consistently demonstrated the central bank's operational autonomy from government policy through their control of inflation. Specific events in 2002 contributed to the conservative bias in monetary policy in 2003. First, the governor and the finance minister in 2002 agreed that the former would reduce interest rates in return for the government reducing its deficit. In the event, the governor cut rates, but the government was unable to reduce the deficit. The government then attempted (but failed) to change the BoI law in a way that would have effectively turned the central bank into a department of the MoF. (OA 2006, p. 178)

According to the existing BOI Law, the BOI must not provide loans to finance government expenditure. However, the BOI is permitted to finance limited cash shortfalls, lend to finance excess expenditures in foreign currency, and provide loans for the repayments of government debt to the BoI. The BoI's monthly balance sheets disclose the amounts of credits, advances, or overdrafts to the government. (OA 2006, 179)

The BoI is not involved in equity ownership, membership on governing boards, procurement or provision of other services for a fee. In accordance with the BOI Law, the BOI must transfer its net profits to the government within 60 days from the expiration of each fiscal year. Since 1991, the BoI and the MoF have agreed to register part of these profits, known as 'realized real profits', as current income in the government budget. (OA 2006, 179)

The BoI law clearly defines the role of the central bank as the sole fiscal agent and banker to the government. Normally, the BoI plays an important consultative role in setting the government's budget and in suggesting areas for new economic and regulatory legislation. The BoI acts as the manager of foreign exchange reserves. The MoF manages the public debt, accounts of which are published by the BoI. The central bank used to be responsible for arranging auctions through which tradable government bonds are sold to the public, but this responsibility has been transferred to the MoF. (OA 2006, p. 179)

Open process for formulating and reporting monetary policy decisions.

EN

Oxford Analytica (OA), in its 2006 report on monetary transparency on Israel, rates Israel's compliance with this principle as "Enacted." The International Monetary Fund (IMF)'s 2001 assessment indicates that Israel "observes" this principle. The IMF observed that the formulation and reporting of monetary policy in Israel is open and transparent. In the IMF's 2003 update, it concluded that the country continued to observe most principles, but recommended that Israel follow up on the IMF's 2001 recommendation and enact a new central bank law. (OA 2006, p. 180; IMF 2001, p. 60; IMF 2003, p. 3)

The Monetary Policy Forum, headed by the governor, is an informal policymaking body responsible for monetary policy decisions. The Forum advises the governor on monthly monetary plan decisions and consists of directors and senior staff from four departments, including the Research Department, the Monetary Department and the Foreign Exchange Activity Department. Up until 2005, monetary policy decisions were made by the governor alone. Although this continues to be the case, Stanley Fischer is working to change this, and the draft BoI Law is expected to include relevant provisions on the subject. The governor controls all public reporting, giving the appearance of BoI unanimity for all decisions. Differences of opinion and internal disputes only emerge once a senior official resigns and voices such differences to the media. Two new bodies would also be formed under the new law: a Monetary Committee consisting of the governor, the deputy and three independent members, and an administrative council for personnel issues. The Monetary Committee would be responsible for decisions on changes in the interest rate. Its decisions would be reported immediately after being made, and a description of the decision-making process would be published two weeks after the meeting. (OA 2006, p. 181)

Inflation targeting is the main objective of monetary policy. The BoI's Inflation Report details explanations of the interest rate and the monetary instruments used to achieve the inflation target. The report often contains models that help explain how monetary policy instruments control inflation. However, some commentators have highlighted that the previous governor never indicated the importance he gave to each of the BoI models or various economic indices at his disposal when making decisions on interest rates. Once the new BoI law is passed, the way in which monetary policy decisions are made will be altered, in that they will become the combined decision of the Monetary Committee, rather than purely the decision of the governor. As part of the change in law, the BoI will be expected to publish details of how the committee reached its decision as to whether and by how much to change interest rates. Not only should this follow each Monetary Committee decision, but minutes of the meetings should be published within two weeks. Anticipating that this legal requirement will be set down in the new BoI law, the central bank started publishing minutes of its Monetary Policy Forum meetings in May 2006. While this decision has improved transparency relative to the past, minutes do not include information on individual positions in favor or against changes in the interest rate. (OA 2006, p. 180)

According to the IMF, in the 2005 Article IV consultations, Israel has a well-established inflation-targeting framework--and the fully floating exchange rate that it requires--but there is scope for improving the analytical framework used to formulate policy and to communicate with the public. In the past, the BoI largely relied on measures of market-based inflation expectations to adjust the policy rate, rather than developing a forecast based on the BoI's own views about the fundamentals driving the inflation process. It is widely recognized that over-reliance on market expectations can give rise to an indeterminacy problem as market participants look to the central bank to provide an anchor for inflation and inflation expectations. For this reason, increased emphasis has recently been given to communicating the BoI's views about future inflation developments and how the BoI will likely respond to new information. (IMF 2006, p. 13)

In the 2006 Article IV consultations, it was noted that in line with IMF staff advice, the authorities have improved the transparency of monetary policy by (i) giving greater prominence to the analysis of inflation dynamics in the Inflation Reports; and (ii) initiating the publication of minutes from policy meetings. (IMF 2007, p.5)

The BoI has comprehensive inflation forecasts, including 'fan chart' projections of inflation. Since 2003, the projections have covered the coming twelve-month period, rather than the calendar year. The BoI in 2003 also provided, for the first time, a detailed explanation in both English and Hebrew of the methodology behind its inflation target. There is no explicit weighting given to any one indicator of inflationary pressure. The BoI and the MoF have been working more closely together over the past three years to ensure that their forecasts match. (OA 2006, p. 180)

The IMF has recommended that the BoI "communicate more clearly its policy and its views regarding the inflationary environment in order to continue anchoring expectations within the inflation target range". It recommends that the BoI supplement the half-yearly Inflation Report with interim quarterly updates, and that the BoI place more emphasis on the dynamics of future inflation in the report. The BoI agrees on the need for greater transparency, although it is concerned that the markets might misinterpret the additional information -- specifically, the assessment of risks and likely policy response.15 Again, the policy announcements which will be released once the new BoI law is passed will improve the level of information available to the public. (OA 2006, p. 180)

According to the OA report, since 2001 the central bank's ability to use monetary instruments has improved. The BoI operates in the primary and secondary markets for government securities. The lending rate for required reserves at the central bank (the 'auction rate') is the primary tool of monetary policy. Open market operations are conducted in government securities for minor liquidity adjustment. T-bills are issued to operate monetary policy. There are no longer any ceilings on T-bills, and the market for these has widened. (OA 2006, p. 180)

The current BoI law details all monetary policy instruments. The interest rates on the BoI's lending and auctions for deposits from banks serve as important instruments. The BoI's major monetary policy tool in recent years was the deposit auctions conducted with commercial banks, but it has now moved to the sale of short-term notes. In 2002, the BoI embarked on a programme to increase the use of the monetary auctioning of tradable paper, known as makam, after the ceiling on makam was eliminated in December 2001. In 2005, the BoI also adjusted the way it conducts its monetary auctions. Previously, it lent to banks at preferential interest rates; that system has now been abolished and there is a band -- at 1% below BoI rates for deposits, and at 1% above BoI rates for lending. Banks also used to be able to carry over any deficits they held on the inter-bank market from day to day, but transaction balances are now closed on each trading day. (OA 2006, p. 181)

By law, the BoI must publish certain reports that make it accountable for its actions. Among these is a weekly report which is published in the official gazette, Reshumot, showing amounts of currency in circulation and details of assets as cover for liabilities. The current BoI Law also specifies the various reports that need to be prepared: the governor must submit an Annual Report, including a balance sheet, to the government and the Finance Committee of the Knesset; the governor must also present a monthly report to the government containing the discussions and resolutions of the BoI's Advisory Committee. (OA 2006, p. 182)

Changes to the setting of monetary policy instruments have mainly involved the replacement of administrative instruments by market-oriented ones. The governor must consult the Advisory Committee on proposed changes in monetary policy instruments. These are announced immediately after a decision is made and disclosed in the Annual Report, the Inflation Report and on the BoI's website. Twice a year, the central bank publishes an Inflation Report, that examines monetary developments and the policies needed to achieve the inflation target. This is published on time, and copies are available in English. At any time when the money supply increases by 15% or more, the BoI is required to send a special report to the government. (OA 2006, p. 182)

The BoI failed to publish its Annual Report for 2001 as a result of an internal dispute between the governor and the workers' committee. The Annual Report for 2002 was published on time, but as a series of assessments, rather than as a single document. This method of producing the Annual Report continued in 2004 and 2005; whereas previously the research department produced one report, now economists from all departments participate in the preparation of a single document to be made available to the public. All the chapters of the report are discussed in a single forum -- mainly composed of research department staff, but also attended by other BoI economists -- before they are submitted to the governor. The Annual Report is published in English, but with some lag. (OA 2006, p. 182)

The BoI has created a multi-year budget, based on budget trends and actual legislation, and published it for the first time in the 2002 Annual Report. It was updated in March 2003 to reflect the passage of more than 200 new measures. It is currently being updated to reflect this year's National Budget. The BOI's multi-year budget study is a 70-page report listing each separate budgetary component and each assumption that goes into it. (OA 2006, p. 182)

Fischer's predecessor as governor used speeches and press releases as his preferred means of communicating with the public. This centralised the governor's control over the flow of information from the BoI and circumvents the requirement that he hold an ongoing dialogue with the MoF. By contrast, Fischer is committed to the adoption of standard international practices including more open communication. (OA 2006, p. 182)

Public availability of information on monetary policy.

CP

Oxford Analytica, in its 2006 report on monetary transparency on Israel, rates Israel's compliance with this principle as "Compliance in Progress." The International Monetary Fund (IMF)'s 2001 assessment indicates that Israel 'observes' this principle. (OA 2006, p. 177; IMF 2001, p. 60)

As reiterated in the 2006 Article IV consultations, Israel subscribes to the Special Data Dissemination Standards (SDDS) and is in full observance of the SDDS's prescriptions for data coverage, periodicity and timeliness, and for the dissemination of advance release calendars.. (IMF 2007, p. 1)

In its 2006 ROSC Data Module, the IMF recommended the standardization of monetary statistics collection and dissemination. Since June 2006, a new BoI Statistics and Information Division has been responsible for collecting monetary statistics and has started a project to calculate aggregate monetary statistics strictly according to the IMF Monetary and Financial Statistics Manual for reporting based on SDDS. Seasonally adjusted data or three-month rolling averages are available on the website of the BoI. (OA 2006, p.184)

According to the IMF's 2001 assessment, information about foreign exchange reserve assets, liabilities, and commitments by the monetary authorities are publicly disclosed on a pre-announced schedule. A special unit within the BOI is responsible for providing information to the media and general public on BOI policies and activities. Press releases addressing monetary policy and financial issues are issued regularly by the Governor, Directors of the BOI and relevant senior staff appear regularly in the media before the Knesset Finance Committee. The BOI Law specifies the rules regarding emergency financial support of the BOI, although there if no established policy or recent experience with such loans and they are not explicitly disclosed. (IMF 2001, p. 60)

Daily interest rate data are disseminated on: the BoI key rate (the policy variable); auction rates for short-term and long-term government securities; the average inter-bank loan rate (a proxy for the policy variable rate); and yields to maturity from secondary markets on government securities: (a) long-term bonds with ten-year maturity, linked to the CPI; and (b) short-term unlinked securities, with maturities of nine to twelve months. (OA 2006, p. 183)

Central bank data are disseminated monthly in millions of New Israeli Sheqalim (NIS) on the analytical accounts of the central bank, and cover the balance sheet of the BoI. Data are disseminated on: reserve money; net domestic claims on the central government (there are no claims on local authorities, non-profit institutions, or non-financial public enterprises); net domestic claims on the private sector; and net foreign assets. The central bank also produces an international investment position, external debt, exchanges rates and the analytical accounts of the banking sector. (OA 2006, p. 183)

The BoI publishes monthly balance sheets with a lag of two to three weeks from the end of each reporting calendar month. Annual balance sheets, including a profit and loss account, must be submitted to the government and the finance committee of the Knesset within five months from the end of the BoI's business year. These are posted on the BoI's website and are available in the Annual Report. Balance sheets are prepared according to Israeli accounting standards. (OA 2006, p. 183)

The BOI has a special unit that provides comprehensive information to the public and media on a regular basis. It is, however, subservient to the governor. BOI press releases are invariably designed to highlight only those points that the BOI wishes the public to recognize. Dissenting interpretations of the data are never included in the summaries. This would improve if the new BoI Law is passed, as it would enforce regular public announcements on monetary policy decisions and how they were reached. (OA 2006, p. 184)

The BoI has begun to enhance the public understanding of the inflation process by presenting different economic scenarios Improvements in transparency via the BoI website include the cataloguing of 400 publications, searchable by name, topic, author and other parameters. In 2003 directives and legislation on money laundering were posted on the website, with English translations. At the same time, there were improvements in the production of the Recent Economic Developments reports, which previously were translated and posted with a six-month lag. The Shekel exchange value time-series, dating from the establishment of Israel in 1948, was also made available on the BoI website. In 2005, the central bank published a further 100 time series data items in an interactive format on the website. As of 2006, all research working papers are published with an English abstract. Whether or not to publish an entire research paper in English is up to the author. While the BoI does not provide a pre-announced schedule of data to be released, this is available on the Central Bureau of Statistics (CBS) website. (OA 2006, p. 184)

At present, there are no regulations or policies that govern the BoI's role as lender of last resort. While there is no formal guarantee of central bank intervention in the event of a bank crisis, it is informally expected that the BoI would offer its support, as happened in 2002.31 A risk team with representatives from the major banks is currently working together to estimate risks and decide how best to manage them. (OA 2006, p. 184)

Accountability and assurances of integrity by the central bank.

CP

Oxford Analytica, in its 2006 report on monetary transparency on Israel, rates Israel's compliance with this principle as "Compliance in Progress." The International Monetary Fund (IMF)'s 2001 assessment indicates that Israel 'observes' this principle. (OA 2006, p. 185; IMF 2001, p. 60)

The Knesset's Finance Committee summons the governor to discuss any matters related to the activities of the BoI. This normally occurs three or four times a year. In particular, these meetings are held following the publication of the BoI's Annual Report or interim assessments of inflation for the current year that indicate significant changes in trends. The governor often authorizes the appearance of other officials before this committee and other institutional bodies. (OA 2006, p. 185)

The annual audited financial statement of the BOI is disclosed two months after the end of the financial period. An independent, private sector auditor audits the financial statement. Significantly, detailed information on the expenses and revenues of the BoI are not publicly disclosed. (OA 2006, p. 185)

While internal governance procedures are not publicly disclosed, and therefore are not part of the media debate on the BoI's operations, the state comptroller does have access to the BoI's internal audit reports and can publish its own reports, subject to secrecy constraints. (OA 2006, p. 185)

Rules that regulate the conduct of officials are based on the BoI Law and the code of conduct for central bank employees in Israel. In particular, the rules specify how BoI employees should deal with issues such as secrecy and work processes. Legal protection exists for all BoI officials and is covered by the legal code used for all public employees. (OA 2006, p. 185)