The Royal Swedish Academy of Sciences announced on Monday that the former chair of the U.S. Federal Reserve was one of three U.S.-based economists who were awarded a prize for their research on financial crises and banks.

Fed Chair Ben Bernanke Testifies On Federal Reserve's Liquidity Programs

Ben Bernanke, former chair of the Federal Reserve, was one of three people honored with the prestigious award.

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The prize was shared by economists Douglas Diamond and Philip Dybvig, who are both based at the University of Chicago.

The committee said the trio improved their understanding of the role banks play in the economy.

The Great Depression, which the committee said was the worst economic crisis in modern history, was the subject of an analysis by the Federal Reserve's former chairman, Ben Bernanke.

The committee said that his work showed how bank runs can deepen and prolong the crisis.

The work done by Diamond and Dybvig shows that banks are vulnerable to rumors of collapse and subsequent runs if they are not careful.

Diamond's work documented how banks lose socially valuable information about borrowers when they fail.

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During the financial crash of 2008, the research credited in the 2022, has been of significant real world importance. The Fed leader took unprecedented steps to intervene in the financial system and prop up major lenders, which earned him heavy criticism. Many credit him with saving the world from a second Great Depression despite his policies being unable to stave off the severe recession that followed.

$1 million. The amount of money given to this year's prize winners is about the same. The prize money will be divided according to who gets it.

Surprising Fact

The prize for economics is different from the others. Economics was not included in Alfred Nobel's will in 1895. The central bank of Sweden established it in 1968 and first awarded it in 1969. It is called the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel.

Crucial Quote

Tore Ellingsen is the Chair of the Committee for the Prize in Economic Sciences.

The lunch with Ben Bernanke was with the Financial Times.

The Wall Street Journal reported that Bernanke was worried about a second great depression.

Ben Bernanke loosened up during the post-crisis years.