Dr Karnit Flug became the first woman to be named Bank of Israel governor on Sunday, after serving as interim bank chief during a nearly four-month official hiatus.
"We were impressed by Dr. Flug's performance as head of the Bank of Israel over the past months, and are certain she will help us march Israel's economy to further achievements in face of the global economic upheaval," Israeli Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid said in a statement.
Flug, 58, had served as deputy governor of the bank since 2011 and took the helm while Netanyahu and Lapid sought a new governor, after Stanley Fischer stood down on June 30 after a successful eight-year run.
Her appointment comes after Netanyahu and Lapid tapped two well-known economists, Jacob Frenkel and Leo Leiderman, both of whom withdrew after personal scandals emerged.
Flug was chosen over three other final candidates: Tzvi Eckstein and Victor Medina, both former deputy governors of the bank, and former Argentine central bank governor Mario Blejer.