The World Economic Forum has set up a new task force in January this year with the Bank of England Governor
Mark Carney and his counterpart at the Reserve Bank of India, Raghuram Rajan,
to study how rapid changes in technology affect financial stability and growth.
However, there are more similarities between the two economist-governors than
sharing a global task force.
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| Raghuram Rajan predicted the 2008 financial crisis |
In 2005, during the
heydays of easy money and sub-prime mortage, Rajan warned about the growing
risks in the financial system and proposed policies that would reduce such
risks. Rajan's comments evinced criticism from no less than the former US
Treasury Secretary Lawrence Summers who termed the warnings “misguided”
and Rajan a "luddite".
However, following the 2008 economic crisis, Rajan's views came to be seen as
prescient.
Carney's actions as the
Governor of the Bank of Canada, prior to donning the mantle at the Bank of
England, are said to have played a major role in helping Canada avoid the worst
impacts of the financial crisis that began in 2007. The most important being
the decision to cut interest rates in March 2008, only a month after his appointment.
Now as the head of the
Bank of England, Carney is warning against a possible British exit from the
European Union. Carney's argument is straight and simple - overlooking the
risks do not necessarily reduce them - a somewhat similar vein to what Rajan
articulated in 2005.
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| Mark Carney is blamed for scare mongering |
Carney's comments
attracted severe criticism from British politicians of the 'Leave Campaign' who
are alleging politicisation of institutions and that the governor is toeing the
line of Prime Minister David Cameron and Chancellor George Osborne in the
fractured Tory government.
Rajan has also drawn flak
from the likes of the maverick Indian politician Subramanium Swamy, who is baying for his blood in a bid to
hit the incumbent Finance Minister Arun Jaitley in his (Swamy) mission to grab
the chair for running India's finances. A friend posted that Rajan was seen at
the bustling shopping district of Oxford Street on Saturday and his wife was at
the Boots, possibly getting some anti-septic cream to soothe the wounds inflicted
by the bristling broadside of a desperate Dr Swamy.
Carney met his wife,
Diana Fox a British economist specialising in developing nations, while at the
University of Oxford, and Rajan is married to Radhika Puri Rajan, whom he met
while they were both students at IIM Ahmedabad. Radhika teaches at the
University of Chicago Law School.
Tirthankar Bandyopadhyay is a journalist and media consultant.
He can be contacted at tirthankarb@hotmail.com
All comments are personal.
