Financial Crisis: Hire economic historians, not mathematicians and physicists!
“One of the lessons of the recent crisis, a lesson for bankers and for regulators, is, hire fewer mathematicians and physicists who build models on the basis of data that they can observe over a relatively short period, and hire a few more historians who know what can go wrong even if they don’t necessarily have a good data basis to put into particular models” – concluded keynote speaker Professor Charles Goodhart during the 22nd January 2009 BRE - CASE Seminar in Warsaw. The allocution marked the 100th BRE-CASE seminar, a series first initiated in 1992 by CASE in collaboration with the Polish Development Bank that continued after the latter’s merger under the aegis of CASE and BRE-Bank.
An audience of 200 policy makers, regulators, bankers, academics, financial sector analysts and economic journalists attended the seminar on “The Financial Crisis and the Future of the Financial System” in which Professor Goodhart discussed the systemic origins of the financial crisis, its evolvement, current changes and future ones that should be introduced in the area of financial regulation. Charles Goodhart, Professor of Banking, and Finance and Monetary Economics at the London School of Economics, is a former member of the Monetary Policy Committee, Bank of England (1997–2000).
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