He was one of the big faces of the 2008 financial crisis: the Nobel Prize in Economics was awarded on Monday to Ben Bernanke, the former president of the American central bank (Fed) and his compatriots Douglas Diamond and Philip Dybvig, for their work on banks and their necessary bailouts during financial storms.
The former central banker, even if he did not prevent the bankruptcy of the American investment bank Lehman Brothers in 2008, has remained in recent economic history as the “Ben helicopter”, which opened the financial floodgates of the Fed so as not to reproduce the errors of the excessively brutal tightening of its predecessors of the 1930s, which had contaminated the stock market slump on production and employment.
The former professor of economics, a specialist in the Great Depression, left his post as head of the Federal Reserve eight years ago when he saw his role in bringing the American economy out of the crisis.
The award-winning trio “has significantly improved our understanding of the role of banks in our economy, particularly during financial crises, as well as how to regulate financial markets”, welcomed the Nobel jury.
“An important discovery of their research”, whose work began from the 1980s, “was to show why avoiding the collapse of banks is vital”, underlined the committee of the Swedish Academy of Sciences responsible for awarding the prize. price.
Aged 68, Ben Bernanke was chairman of the Federal Reserve (Fed) between 2006 and 2014, a tenure marked by the financial crisis of 2008-2009 and the fall of the American bank Lehman Brothers. The largest bank failure in U.S. history triggered a global financial crisis and underscored the risk posed by banking giants. too big to fail (“too big to fail”).
The former central banker analyzed the Great Depression of the 1930s and showed in particular how the massive withdrawals – the “ bank runs (“rush at the counters”) — “were a decisive factor in prolonging and worsening the crises”.
The jury, however, makes no direct reference to Ben Bernanke’s action at the head of the Fed in the motivations for his award.
Douglas Diamond, born in October 1953, and Philip Dybvig, 67, respectively professors at the University of Chicago and Washington University in St. Louis, have developed theoretical models showing how banks can be vulnerable to rumor about their imminent collapse.
This work led in particular to the Diamond-Dybvig model on “self-fulfilling” bank runs, recalls the Nobel committee.
“I was sound asleep when I heard a Swedish voice on the phone […]. I wondered if it was genuine,” joked Douglas Diamond, recounting how he reacted to the announcement that he had won the Nobel Prize in economics. “Oh, that’s not bad! he thought next. “You shouldn’t earn it too young, afterwards, it goes to your head,” added this professor, who says he is “obsessed with financial stability and banks”.
Asked about the current risks of the financial system, Mr. Diamond acknowledged the interest hikes currently being carried out by central banks around the world to curb inflation were tantamount to “taking liquidity out of the system”.
“Central banks must be careful about the rate at which they reduce this liquidity or else they will face financial crises that will tie their hands and prevent them from achieving their macroeconomic goal,” warned the Nobel Prize winner.
“Fake Nobel”
The only one not to have been provided for in Alfred Nobel’s will, the economics prize “in memory” of the inventor was added much later to the five traditional prizes, earning him among his detractors the nickname ” false Nobel”.
On Friday, the Nobel Peace Prize was awarded to imprisoned Belarusian activist Ales Beliatski, the NGO Memorial and the Ukrainian Center for Civil Liberties in the midst of Moscow’s invasion of Ukraine.
The day before, Annie Ernaux had become the first Frenchwoman to win the Nobel Prize for Literature, after 15 men.
The Nobel Prize for Medicine had opened the ball by crowning the Swede Svante Pääbo last Monday, father of the man of Denisova and cartographer of the DNA of the Neanderthal man.
That of physics rewarded the Frenchman Alain Aspect, the Austrian Anton Zeilinger and the American John Clauser for their discoveries on the revolutionary mechanism of “quantum entanglement”.
A trio, the Americans Carolyn Bertozzi and Barry Sharpless together with the Dane Morten Meldal, won in chemistry for “the development of click chemistry and bio-orthogonal chemistry”, with an extremely rare second prize for Mr. Sharpless.
Despite only one woman crowned in science and 100% American-European Nobel prize winners this year, the Nobel prize winners are progressing in terms of diversity, one of the main officials of the committees awarding the awards told AFP on Monday.
Hans Ellegren, secretary general of the Royal Swedish Academy of Sciences, said he was “quite satisfied” with the evolution of the number of women crowned in science, pointing to the growing number of laureates over the past five years.