Ben Bernanke, former chair of the US Federal Reserve, speaks during the annual meeting of the American Economic Association and the Allied Social Science Association on Friday, January 4, 2019. Bernanke is one of three winners of the 2022 Nobel Prize in Economics.
Bloomberg | Bloomberg | Getty Images
US-based economists Ben Bernanke, Douglas Diamond and Philip Dipwig have been awarded the 2022 Nobel Prize in Economic Sciences for their research on banking and financial crises.
Bernanke was chairman of the Federal Reserve from 2006 to 2014, and is now at the Brookings Institution in Washington, D.C., Diamond is a professor at the University of Chicago’s Booth School of Business, and Debvig is a professor at the Olin School of Business at Washington University in St. Louis.
The Nobel Committee said its work in the early 1980s “significantly improved our understanding of the role of banks in the economy, particularly during financial crises”, and in explaining why it was important to avoid bank collapse. They added that this was “invaluable” during the 2008-2009 financial crisis and the coronavirus pandemic.
Bernanke’s analysis of the Great Depression of the 1930s showed how and why the bank rush was a major reason the crisis was so long and severe. Meanwhile, Diamond and Dybvig’s work considered the socially important role that banks play in settling the potential conflict between savers wanting access to their money and the economy needing savings to be invested; And how governments can help prevent bank outflows by providing deposit insurance and acting as a lender of last resort.
Laureates of the prize – officially called the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel – receive 10 million Swedish kronor ($883,000) each.
The Royal Swedish Academy of Sciences selects the winners from a list of nominees recommended by the Economic Sciences Prize Committee. This makes it selected from among the names submitted by about 3,000 professors, past winners and members of the Academy by invitation. People cannot nominate themselves.
In a press conference following the announcement, Diamond was asked if he had any warning for banks, institutions and governments in light of the current interest rate hikes and the prediction of another financial crisis.
Diamond said, “Financial crises, the way I and Phil Debwig think about it, get worse when people start to lose faith in the stability of the system. And it’s all basically related to how profitable they are in believing that the banking sector, as well as being stable.”
“So in periods where things happen unexpectedly, I think people have been surprised at how quickly nominal interest rates are going up around the world, that could be something that raises some concerns in the system. We’ve seen some of this in the UK in its existing sector. on liability in the insurance market.
“So I think the best advice is to be prepared to make sure that your part of the banking sector is seen as healthy and stays healthy and responds in a measured and transparent way to changes in monetary policy.”
Asked if he expected another financial crisis, he said the world was “better prepared” than it was in 2008, and that regulatory improvements have made the system less vulnerable.
“The banking sector itself is in a very solid state, good net worth, and good risk management,” he said. “The problem is that these vulnerabilities from fear of flight, turmoil and crisis can appear anywhere, not just commercial banks.”
The insight that he and Dybvig have tried to provide, he said, is that it’s all about being able to issue short-term liquid liabilities, such as deposits or shares, that are more liquid than the underlying assets. He again cited the UK insurance sector, when he said the “non-compliance” came when there were calls for more guarantees from insurers. It was the Bank of England They had to intervene to curb market turmoil And the protection of pension funds after a controversial government budget.
last year , The Economics Prize has been divided into three ways. He went to David Card, for his work on labor economics; And Joshua D. Angreste and Guido Empains for their contributions to the analysis of causal relationships.
Unlike the other five Nobel Prizes, which have been handed out since 1901 and were awarded in the will of the Swedish inventor, chemist, and engineer Alfred Nobel, the Economics Prize was established in 1969 by the Swedish Central Bank in his honor. It is the latter that is announced every year.
the famous The Nobel Peace Prize was awarded on Friday by Belarusian human rights activist Alice Bialiatsky, the Russian human rights organization Memorial, and the Ukrainian Civil Liberties Center, a non-governmental organization.
This year’s physics prize went to Alan Aspect, John Francis Closer and Anton Zeilinger, for their discoveries in quantum mechanics. The Nobel committee said it used “pioneering experiments” examining particles in entangled states to usher in a new era of quantum technology.
The Chemistry Prize was split between Carolyn R. Bertozzi, for her work using click and bioorthogonal chemistry to map cells and develop more targeted cancer therapies; and Morten Meldal and K. Barry Sharpless, who the committee said “layed the foundations of click chemistry,” which involves the binding of biocompatible molecules.
The Medicine Prize was awarded to Svante Papu “for his discoveries relating to the genome of extinct hominins and human evolution”.
The French writer Annie Ernault won the literature prize.
“Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver.”