JERUSALEM (Reuters) - Stanley Fischer, who helped shape modern economic theory during a career that included heading the Bank of Israel and serving as vice chair of the U.S. Federal Reserve, has died at the age of 81.

The Bank of Israel said he died on Saturday night but did not give a cause of death. Fischer was born in Zambia and had dual U.S.-Israeli citizenship.

As an academic at the Massachusetts Institute of Technology, Fischer trained many of the people who went on to be top central bankers, including former Federal Reserve Chairman Ben Bernanke as well as Mario Draghi, the former European Central Bank president.

Fischer served as chief economist at the World Bank, and first deputy managing director at the International Monetary Fund during the Asian financial crisis and was then vice chairman at Citigroup from 2002 to 2005.

During an eight-year stint as Israel's central bank chief from 2005-2013, Fischer helped the country weather the 2008 global financial crisis with minimal economic damage, elevating Israel's economy on the global stage, while creating a monetary policy committee to decide on interest rates like in other advanced economies.

He was vice chair of the Federal Reserve from 2014 to 2017 and served as a director at Bank Hapoalim in 2020 and 2021.

Current Bank of Israel Governor Amir Yaron praised Fischer's contribution to the Bank of Israel and to advancing Israel's economy as "truly significant".

The soft-spoken Fischer - who played a role in Israel's economic stabilisation plan in 1985 during a period of hyperinflation - was chosen by then Finance Minister Benjamin Netanyahu and Prime Minister Ariel Sharon as central bank chief.

Netanyahu, now prime minister, called Fischer a "great Zionist" for leaving the United States and moving to Israel to take on the top job at Israel's central bank. 

"He was an outstanding economist. In the framework of his role as governor, he greatly contributed to the Israeli economy, especially to the return of stability during the global economic crisis," Netanyahu said, adding that Stanley - as he was known in Israel - proudly represented Israel and its economy worldwide.

Israeli President Isaac Herzog also paid tribute.

"He played a huge role in strengthening Israel's economy, its remarkable resilience, and its strong reputation around the world," Herzog said. "He was a world-class professional, a man of integrity, with a heart of gold. A true lover of peace."