The 2022 Nobel Prize in Economics has been awarded to former US Federal Reserve Chairman Ben Bernanke, and US economists Douglas Diamond and Philip Dybvig.
The three economists laid the foundation for how world powers responds to major financial crises like the recent pandemic or the Great Recession of 2008.
“The actions taken by central banks and financial regulators around the world in confronting two recent major crises, the Great Recession and the economic downturn that was generated by the COVID-19 pandemic, were in large part motivated by the laureates’ research.”
– The Swedish Academy
The laureates’ research suggests that preventing the collapse of US investment bank Lehman Brothers would have made the 2008 financial crisis less severe.
They also argue that banks taking short-term deposits and then lending it out in the long term is the most efficient way for the financial sector to operate.
Banks are efficient at assessing creditworthiness and monitoring the use of funds, and should instead act as intermediaries between savers and borrowers, they argue.
Arguably the most prestigious award in the scientific world, the Nobel Prize in economics is awarded by the Royal Swedish Academy of Sciences, worth 10 million Swedish crowns ($915,000).
