AmericaSpeaks TheVoiceOfJoyce Three men were awarded the Nobel Prize in Economics for their understanding of the monetary system and how to keep Banks from failing. Ben Bernanke’s paper explaining that Banks can propagate crisis helped write the Laws that make Bank safe. Dr Diamond and Mr Dybvig wrote papers on the risks of short term borrowing that goes long. Today, our Banks are safe, some shadow banks like insurance companies and mutual funds need equal regulation. They invest in the market, hold our pensions and require equal regulation.

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www.nytimes.com/live/2022/10/10/business/nobel-prize-economics

Mr. Bernanke in 1983 wrote a paper that broke ground in explaining that bank failures can propagate a financial crisis rather than simply being a result of the crisis.

Mr. Diamond and Mr. Dybvig the same year wrote a paper on the risks inherent in maturity transformation, the process of turning short-term borrowing into long-term lending. Mr. Diamond also wrote about how banks monitor their borrowers, noting that knowledge about borrowers disappears upon bank failures, extending the consequences of the upheaval.

“The laureates have provided a foundation for our modern understanding of why banks are needed, why they’re vulnerable, and what to do about it,” said John Hassler, an economist at the Institute for International Economic Studies at Stockholm University and a member of the prize committee.

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