Last month, students from four continents joined forces to call for reform of the economics curriculum.
In an open letter, the students said they wanted their courses to delve into a wider range of economics theories and methodologies than the standard neo-classical model that dominates undergraduate teaching, and to learn more about the implications of policy-making.
Speaking to those students was a heartening experience – all of them struck me as extremely thoughtful and articulate. Their desire for reform seemed driven by a curiosity about the world and what economics could do to improve it.
I suspect they’ll be encouraged by comments made in a speech today by the similarly thoughtful and articulate Benoît Cœuré, who sits on the European Central Bank’s executive board.
Undergraduate economics teaching has taken a (deserved) bashing since the crisis from some high-profile names in academia and officialdom. And, most importantly, the students themselves.
Among those leading the reform effort is an impressive group at the University of Manchester, the Post-Crash Economics Society. Today it has published a manifesto that is well worth a read for anyone with the slightest interest in why the discipline failed so spectacularly to spot the financial crisis.
The manifesto is all the more important as the group’s attempts to install an optional course on alternative theories on financial crises on the undergraduate syllabus were rejected earlier this month. The bashing, it appears, has not been bruising enough to trigger root-and-branch reform of the way economics is taught.
In comments released today, Andy Haldane, the Bank of England’s executive director for financial stability, has called for “a radical rethink” of banks’ accounting rules, the reason being that the rules as they stand have done much to destabilise the financial system.
To date, accounting rules for banks have bent with the financial stability wind in ways which have amplified investor and regulatory uncertainty. To lean against the prevailing wind, accounting rules for banks may need to recognise more explicitly their differences.
As Mr Haldane notes, this is a debate that over the past century has been shaped by financial crises.
Hello and welcome to today’s live blog on the Treasury Select Committee’s hearing for the Bank of England’s Financial Stability Report.
The governor will be giving evidence, as will executive director for financial stability Andy Haldane, and external Financial Policy Committee members Michael Cohrs and Robert Jenkins.
This post should update automatically every few minutes, although it may take longer on a mobile device. All times are London time.
13.18 The live blog is now closed.
13.17 Here are the key takeaways from today’s hearing:
- The Bank is clearly nonplussed with the Treasury Committee’s call for a strong supervisory board. Sir Mervyn
Andy Haldane, the Bank of England’s executive director for financial stability, writes in the New Scientist today on what finance can learn from meteorology.
Mr Haldane has been one of the leading advocates of the view that economics should borrow from science in order to better understand the nature of systemic risk.
In the New Scientist article, he writes that creating a map of the entire financial network would allow regulators to issue the equivalent of a weather warning.
Andy Haldane, the Bank of England’s executive director for financial stability, is considered one of the most original thinkers in any central bank.
Mr Haldane, to his credit, not only picks holes in existing practices, but also suggests possible fixes.
His call for regulators to lower capital and liquidity buffers has, however, largely fallen on deaf ears, with the majority of the interim Financial Policy Committee against it. But another of his ideas appears to be more popular.
The only thing we have to fear is fear itself.
That’s according to Andy Haldane, the executive director of financial stability at the Bank of England, who said in August markets were over-pessimistic as a result of “psychological scarring” from the events of recent years.
It would seem that what Mr Haldane labelled the “fear factor” has also afflicted his boss, Sir Mervyn King, who yesterday claimed “this is the most serious financial crisis we’ve seen at least since the 1930s, if not ever.”