Remembering Stanley Fischer

Kaleidoscope remembers one of Habonim’s most accomplished alumni who passed away on May 31st 2025

New York Times obituary of June 1st 2025 (excerpted)

Stanley Fischer, Who Helped Defuse Financial Crises, Dies at 81

He was the No. 2 at the Federal Reserve and the I.M.F. during periods of economic turmoil, and he mentored future economic leaders, like Ben Bernanke.

By James R. Hagerty

June 1, 2025

Stanley Fischer, an economist and central banker whose scholarship and genial, consensus-seeking style helped guide global economic policies and defuse financial crises for decades, died on Saturday at his home in Lexington, Mass. He was 81.

The cause was complications of Alzheimer’s disease, his son Michael said. 

Mr. Fischer served as the head of Israel’s central bank from 2005 to 2013, as vice chairman of the Federal Reserve Board from 2014 to 2017 and as the No. 2 officer at the International Monetary Fund from 1994 to 2001, when that agency was struggling to contain financial panics in Mexico, Russia, Asia and Latin America.

As a professor at M.I.T., he was a thesis adviser or mentor to an extraordinary range of future leaders, including Ben S. Bernanke, later chairman of the Fed; Mario Draghi, president of the European Central Bank; and Kazuo Ueda, governor of the Bank of Japan. 

His former students also included two people who chaired the U.S. Council of Economic Advisers, Christina D. Romer and N. Gregory Mankiw, as well as Lawrence H. Summers, who served as secretary of the Treasury and president of Harvard University.

“He had a role in shaping a whole generation of economists and policymakers,” Mr. Bernanke said in a February 2024 interview for this obituary. That included spurring Mr. Bernanke’s initial interest in macroeconomics and monetary policy.

In 1998, The Times described Mr. Fischer as “the closest thing the world economy has to a battlefield medic.” He helped negotiate a rescue package for Russia by cellphone while standing atop a sand dune on Martha’s Vineyard, where he was on vacation. 

The cures Mr. Fischer prescribed for financial crises were broadly in line with the Washington Consensus, a set of “best practices” compiled in 1989 by John Williamson, a British economist. 

Those guidelines called for openness to free markets, global trade and foreign investment, among other things. Joseph E. Stiglitz, a Nobel Prize-winning economist and Columbia University professor, accused the I.M.F. of acting like a “colonial ruler” and in a 2002 interview with The Times said that the fund and the World Bank were trying to impose standard approaches that didn’t take full account of differing conditions in each country. 

Mr. Fischer, right, with Prime Minister Benjamin Netanyahu of Israel in 2012. Mr. Fischer served as the head of Israel’s central bank from 2005 to 2013.Credit...Abir Sultan/European Pressphoto Agency

In a 2003 lecture on globalization, Mr. Fischer generally defended the I.M.F.’s approach by arguing that opening up to foreign trade and investment had lifted multitudes out of poverty in China and India.

Mr. Fischer was a leader in updating the theories of the British economist John Maynard Keynes, whose calls for government intervention to steer the economy resonated from the 1930s through the 1960s but came under harsh attack in the 1970s. At that time of high inflation and low economic growth, a combination known as stagflation, economists at the University of Chicago and elsewhere argued that government intervention was likely to be self-defeating.

Mr. Fischer’s research in the 1970s focused on that split between Keynesian economists and the Chicago school’s faith in the market. If unemployment was too high, the Keynesians argued, central banks could stimulate the economy by making the money supply grow faster. The Chicago-school economists countered that such stimulus would prompt workers to expect higher inflation and demand pay increases; the result would be faster inflation and no sustainable rise in employment.

In a 1977 paper, “Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule,” Mr. Fischer argued that wages were “sticky” because of long-term contracts and didn’t adjust immediately when a central bank changed its policy. Thus, he wrote, a well-timed stimulus program could boost job creation in the near term without igniting inflation.

“There is some room for maneuver by the monetary authorities” in steering the economy, he concluded.

His work in this area helped shape a broad agreement among intervention-minded economists under the label of New Keynesian economics.

Mr. Fischer, right, in 2012 with Ben Bernanke, the Federal Reserve chairman and a former student of Mr. Fischer’s. “He had a role in shaping a whole generation of economists and policymakers,” Mr. Bernanke said. Credit...Ted S. Warren/Associated Press

Mr. Fischer also was chief economist of the World Bank in the late 1980s and vice chairman of Citigroup in the early 2000s. He failed in a long-shot bid to become the head of the I.M.F. in 2011, losing out to Christine Lagarde of France, partly because he exceeded the age limit for the job. At the time, he argued that he was “full of vigor” at 67 and should be given an exemption from the ceiling of 65.

Mr. Fischer was influential partly because of his diplomatic nature, Olivier Blanchard, one of his former students and later a colleague at M.I.T., wrote in 2023. Even when the field of macroeconomics “was going through wars of religion, there was no sense of ‘us versus them’ but instead an openness to alternative views,” Mr. Blanchard wrote.

After he took a break from academia in the late 1980s to work at the World Bank, Mr. Fischer was hooked on what he sometimes called his “real world” role. He relished international travel and the fast-paced demands of finding solutions for economic crises affecting billions of lives. 

Stanley Fischer was born into a Jewish family on Oct. 15, 1943, in Lusaka, Northern Rhodesia, then a British protectorate, which became Zambia after independence in 1964. He grew up partly in Mazabuka, a town southwest of Lusaka, where his parents operated a general store. His father, Philip Fischer, was an immigrant from Latvia. His mother, Ann (Kopelowitz) Fischer, was of Lithuanian descent. The family moved to Southern Rhodesia, now Zimbabwe, when Stanley was about 13.

He joined a Jewish youth group and in 1960 visited Israel as part of a program for young leaders. As a high school student, he developed an early interest in economics. During a summer vacation, he read “The General Theory of Employment, Interest, and Money” by Keynes. “I was immensely impressed,” Mr. Fischer told The Washington Post in 2013, “not because I understood it but by the quality of the English.”

At the London School of Economics, where Mr. Fischer enrolled in 1962, he earned both a bachelor’s and master’s degree in economics. For his doctoral studies, he moved to M.I.T., whose economics faculty included Paul A. Samuelson and Robert M. Solow, both of whom would go on to win the Nobel in economic science. 

Mr. Fischer married Rhoda Keet in 1965. They had met as teenagers in a Jewish youth group. She died in 2020. In addition to his son Michael, Mr. Fischer is survived by two other sons, David and Jonathan, and nine grandchildren.

Janet Yellen, left, the chair of the Federal Reserve, swears in Mr. Fischer as a member of the Federal Reserve Board in 2014.Credit...Federal Reserve, via Reuters

After earning his Ph.D. at M.I.T. in 1969, Mr. Fischer moved to the University of Chicago as a postdoctoral researcher and assistant professor. “At M.I.T. you did the mathematical work,” he told The New York Times in 1998, “and at Chicago you asked the question of how this applies to the real world.” His work in Chicago gave him a clearer understanding of that school’s free-market theories and critique of Keynesian economics.

He returned to the more Keynesian bastion of M.I.T. in 1973 as an associate professor. One of his first assignments was to teach a course in monetary economics jointly with Mr. Samuelson. “That was intimidating,” Mr. Fischer said later. “He would insist on taking the chalk and explaining things better than me.”

Gradually, Mr. Fischer became a magnet for graduate students. He encouraged them to visit him every week, “especially if you have nothing to say.” Sometimes he coached students while running with them alongside the Charles River.

His term as first deputy managing director of the I.M.F. — or No. 2 to the agency’s chief, Michel Camdessus — coincided with crises in Mexico, Thailand, South Korea, Russia and Brazil.

After joining Citigroup in 2002, Mr. Fischer served as vice chairman, helped assess country risks and oversaw foreign operations. He left in early 2005 to begin an eight-year stint as head of Israel’s central bank, the Bank of Israel, with the title of governor. Mr. Fischer was granted Israeli citizenship, while retaining his U.S. passport, and made a point of speaking Hebrew during his tenure.

He helped buffer the Israeli economy from the 2008-09 financial crisis, partly by moving swiftly to cut interest rates. When foreign investment pushed up the value of the shekel and threatened to hurt Israeli exporters, Mr. Fischer and his central bank colleagues bought foreign currencies to limit the shekel’s rise. It was gratifying, he said, to be recognized by strangers on a beach and to be thanked for his service to Israel.

Mr. Fischer and his wife, Rhoda, in 2014 arriving at the Jackson Hole Economic Policy Symposium in Wyoming. Credit...John Locher/Associated Press

President Barack Obama appointed him as vice chairman of the Federal Reserve in early 2014, making him the deputy to Janet L. Yellen. During his three years in that post, he was generally supportive of Ms. Yellen but was more eager than she was to return to more normal policies after the extraordinarily low interest rates imposed by the Fed to counteract the financial crisis. Mr. Fischer resigned from the Fed in October 2017, partly to take care of his wife, who had Lewy body dementia.

During a lecture at Oxford University in 2012, Mr. Fischer said he learned in the 1990s that financial crises can be foreseen but typically “take much longer to develop than you expect, and then when they happen, they happen much more quickly than you expect.” After that long lull, he said, “one day the markets turn against you, and you’re in deep trouble.”

Remarks from Colleagues

As Governor of the Bank of Israel:

It is with profound sadness that I extend my deepest condolences on the passing of Governor Stanley Fischer - a great leader in Israel's history. I was greatly honored and privileged to know and work alongside him during our time at the IMF and later at the Bank of Israel. His contributions to Israel and its economy are immeasurable and have left an enduring impact on our country that will continue to benefit our economic future for generations to come.

Indeed, as speakers said yesterday in the funeral ceremony, Stan's unwavering commitment to Israel's prosperity and resiliency fundamentally strengthened the country's financial foundations. Israel and its people are benefitting from the fruits of his efforts to this day. One concrete example is the Israeli economy's ability to withstand the recent war on multiple fronts, which testifies to his foresight and dedication. Despite criticism from members of government and the business sector, he courageously continued his policy of intervening in foreign exchange markets - a strategy that increased Israel's reserves by $200 billion. I remember him telling me, "We are doing this because we do not know when the time will come that we will need to prove our resiliency."

How prophetic those words proved to be. Stan demonstrated that true leadership sometimes requires making difficult decisions that may not be popular in the moment but are essential for the nation's future security and stability. His policies also reflected his approach of always looking ahead to build cushions for difficult times. He used to tell me, "To find out what can go wrong, it is essential not only to look forward but also to try to find out what can come from behind you." This perfectly illustrates Stan's comprehensive risk assessment philosophy that effective leadership requires 360-degree awareness of potential threats and challenges, and shows how he thought about building robust defenses against visible and unexpected dangers. This approach has proven to be crucial for Israel's economic resilience.

Stan chose me to work closely with him as his Chief of Staff during his transformative years at the Bank of Israel, which was the greatest honor of my professional career. I was privileged to assist him in implementing his visionary agenda and witness firsthand his care, kindness and immense capacity for personal warmth. Whether in phone calls or meetings, he would always begin by asking how I was doing and checking on Nili and our three daughters before we turned to any business matters.

I loved Stan, admired him deeply, and already miss him terribly. He was not only Larry Summers's hero but also my hero. The void he has left is immeasurable, but his legacy will live on through all of us who were fortunate enough to learn from him. May he rest in peace, and may we continue to honor his memory by following the path he illuminated for us.

With deepest respect and sympathy,

Nili and Eddy Azoulay

Eddy and Niki Azoulai have worked in Bank Israel since meeting there and marrying. Eddy ran Stanley Fischer’s office for the duration of his holding the post of Governor of the Bank.

As a member of Habonim

A picture (date uncertain) which says it all. Stanley Fischer is shown in back row, far right.

Stanley will be sorely missed by all who knew him personally and appreciated by all who know of his substantial and unique accomplishments.