After former US Federal Reserve Chair Ben Bernanke on Monday won the Nobel Prize in economic sciences for their research into the fallout from bank failures, Zoho co-founder and CEO Sridhar Vembu called it a bankruptcy moment for central banking and the economics Nobel.
"Ben Bernanke wins the economic Nobel Prize at the very moment when the global financial system is (once again) on the edge due to the misguided monetary policies he and other central bankers spearheaded," Sridhar Vembu tweeted.
Bernanke was recognized Monday along with Douglas W. Diamond and Philip H. Dybvig. The Nobel panel at the Royal Swedish Academy of Sciences in Stockholm said the trio's research had shown “why avoiding bank collapses is vital.”
With their findings in the early 1980s, the laureates laid the foundations for regulating financial markets, the panel said.
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“Financial crises and depressions are kind of the worst thing that can happen to the economy," said John Hassler of the Committee for the Prize in Economic Sciences. “These things can happen again. And we need to have an understanding of the mechanism behind those and what to do about it. And the laureates this year provide that.”
Bernanke, 68, now with the Brookings Institution in Washington, examined the Great Depression of the 1930s, showing the danger of bank runs — when panicked people withdraw their savings — and how bank collapses led to widespread economic devastation. Before Bernanke, economists saw bank failures as a consequence, not a cause, of economic downturns.
(With inputs from AP)
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