Andrew G. Haldane

Andrew Haldane is Head of Systemic Risk Assessment at the Bank of England where he is responsible for conducting policy and research on risks to the UK financial system and the Bank’s Financial Stability Report. Prior to that he was Head of International Finance and Head of Market Infrastructure at the Bank. He has written extensively on monetary policy and financial stability issues, including books on inflationtargeting, international financial crises and, most recently, payment systems.

Papers Published in World Economics:

Andrew Haldane on Tim Congdon, Keynes, the Keynesians and Monetarism

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Risk-Pricing and the Sub-Prime Crisis

As the sub-prime crisis celebrates its first birthday, what lessons have been learnt? The crisis was rooted in a misperception problem among end-investors, facilitated by financial engineers selling “tail risk” products. Contrary to the precrisis rhetoric, this tail risk was often transferred to those least able to manage and price it. Once crisis struck, bank balance sheets needed to be repaired. The article argues that the authorities have a key coordinating role to play in ensuring individual bank balance sheet adjustments strengthen, rather than weaken, the financial system as a whole. A credit crunch-an uncoordinated credit contraction—is an example of what policy should be seeking to avoid. Finally, the article considers two medium-term prophylactic policy measures-countercyclical regulatory policy and central trading, clearing and settlement of systemically-important financial instruments. On both theoretical and practical grounds, there are good reasons for believing their time may have come.

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