Newspaper article The Journal (Newcastle, England)

'If We Can Control the Boom We Won't Go Bust'

Newspaper article The Journal (Newcastle, England)

'If We Can Control the Boom We Won't Go Bust'

Article excerpt

THE deputy governor of the Bank of England suggested yesterday that policymakers played a "bit part" in creating conditions that led to the financial crisis and global recession.

In a speech in Barcelona looking at the causes of the financial meltdown, Charles Bean said policymakers were unwittingly one of the many that set the scene for the credit boom and bust leading to the economic woes.

The deputy governor for monetary policy, who is also a member of the Bank's rate-setting Monetary Policy Committee (MPC), said he had a role "in responding to the crisis - and some might charge also a bit part in creating the conditions for it".

Mr Bean said one of the lessons from the crisis is that policymakers should take "pre-emptive action" to stop credit booms from building, although he said the policy rate set by central banks is too blunt an instrument.

He added there could be no one culprit for the events that led to financial melt-downwhich he said was the product of an "underestimation of risk born of the Great Moderation, loose monetary policy in the United States and a perverse pattern of international capital flows". …

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