Monetary Matters with Jack Farley The Central Bank As Crisis Manager | Dr. Patrick Honohan, former Central Bank of Ireland Governor, on Crisis Management, Macroeconomic Shocks, & Tariffs
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Feb 16, 2025 Dr. Patrick Honohan, an honorary professor of economics at Trinity College Dublin and former governor of the Central Bank of Ireland, shares insights from his book on crisis management. He discusses the evolving role of central banks in crisis scenarios, emphasizing the need for proactive strategies over reactive measures. Honohan uses case studies, including the Credit Suisse-UBS takeover, to illustrate strategic communication and preparedness. He also critiques the implications of tariffs on global economies, urging a deeper understanding of their complex impacts.
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Crisis Preparedness
- Central banks should prepare for crises, rehearsing and planning responses.
- This preparation differs greatly from standard price stability operations.
Crisis vs. Normal Times
- Crisis management requires speed, nuanced communication, and government cooperation, unlike typical central banking.
- Understanding the crisis' complexity and information gathering is crucial.
Credit Suisse Collapse
- Credit Suisse's collapse in 2023, despite being a global bank, didn't trigger widespread financial panic.
- Central banks like the Fed and Bank of England chose not to intervene drastically, demonstrating appropriate restraint.
