- Yuri Gripas/Reuters
- Central bankers rescued the world after the financial crisis while governments were dysfunctional, said Jacob Frenkel, chairman of JP Morgan International.
- Central banks became the “only game in town” when governments didn’t show leadership, he said.
- Fenkel and his fellow panelists called for governments to be bold, innovative and reclaim their leadership role alongside the central banks.
LONDON – Central bankers rescued the world in the wake of the 2008 financial crisis when governments were dysfunctional, Jacob Frenkel, chairman of JPMorgan International, said.
Frenkel criticised the ineffectiveness of governments since the financial crisis of 2008 which forced central banks to take their place in the “front line” of policy making, he said at an event in London on Tuesday.
“I would say that the central bankers of the world, that have demonstrated great skill at time when governments were dysfunctional… actually came to the rescue of the world by undertaking activities that normally would not fall in the purview of central banks,” said Frenkel.
He added that in terms of governance, central banks became “the only game in town.”
Jacob Frenkel, a former governor of Israel’s central bank, made his remarks alongside a panel of experts speaking on the normalisation of monetary policy, which included Davide Serra, founder and CEO of Algebris and professor Ngaire Woods, a professor at Oxford University.
Serra, said that democratically elected leaders across Europe “didn’t have the guts to take the actions they should have taken” during the crisis. So they called the “fire marshals, they called the central banks and asked them to put out the fire.”
The panel called for governments around the world to step forward and take more bold and innovative leadership roles, to complement the actions of the central banks. Central banks cut interest rates to record lows and boosted asset purchases to stimulate the global economy after the fall of Lehman Brothers in 2008.
Woods said: “It cannot be that central banks are expected to stay at the front line and resolve that problems…. We really need the politicians and governments to be bold.”