| Publication |
2014.
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| Summary/Abstract |
The history of the Bank of Israel is often told as a story that leads from servitude to independence. According to this conception, the bank was a weak and marginal institution during the developmental period of the state, and it turned into an independent actor in the neoliberal period. This article argues that the portrayal of the bank as marginal during the developing period fails to recognize the essential role it played in contributing to the capacity of the state to allocate credit more effectively. It maintains that that Bank of Israel provided the state with market compatible instruments in order to govern the banking system and depoliticized the allocation of credit. The establishment of the bank had two effects on Israel's political economy: it enabled the government to weaken its dependence on the Histadrut as an agent of development and it allowed it to nurture linkages with the private sector.
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