Danthine sees crisis ending in 2010

14th April 2009, Comments 0 comments

The incoming Swiss central banker expects the global economic crisis to reach its lowest point by January 2010.

GENEVA - Incoming Swiss central banker Jean-Pierre Danthine says he expects the global economic crisis to bottom out by January 2010 and raised doubts about flawed analytical models used in recent years.

"We could have seen the bottom (of the downturn) except for unemployment," Danthine told Le Temps daily on Thursday.

"We should then make sure that the conditions for recovery are the best possible and that the major risk is no longer deflation but inflation," he said.

Danthine, an academic recognised internationally for his work on financial theory, said the models central bankers used proved to be fundamentally flawed in the current crisis.

The control of inflation was one of the big successes of economic theory in the past 30 years but the financial crisis revealed that the theory was incomplete, he explained.

"It leaves a gaping hole, that of the interaction with the financial world," said Danthine, who was appointed earlier in April to the governing board of the Swiss National Bank from January 2010.

"The models that I'm working on, which are the dominant ones in central banks at the moment, cannot explain the crisis we have been through. They need major changes in thinking," he added.

Danthine, a Belgian-Swiss national, is currently a professor of economics and finance at the University of Lausanne and managing director of a think tank, the Swiss Finance Institute.

AFP / Expatica

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