With slacking real sector and bank lending, the transmission mechanism of monetary policy to the real economy and inflation faces a number of problems. Since the economy and financial sector are undergoing restructuring, excess liquidity emerges but circulates within the financial markets only, creating a structural breakdown between the real sector and financial system.
I know that we are being given the award because of the Bank of Israel’s achievements as reflected in the survey carried out by the CFO, and my colleagues and I are truly proud of that. I will not be letting out any secrets if I tell you that recently the Bank of Israel has been the object of much criticism.