On the 10th of this month, the Royal Swedish Academy of Sciences announced three contributors to banking research for The Nobel Prize in Economics.

Ben Bernanke, former chairman of the U.S. Central Bank, Douglas Diamond, professor of business management at the University of Chicago, and Philip Dybvig, professor at the University of Washington in St. Louis, were co-winners.

According to the Nobel Committee, the Nobel Prize winners’ recent study of banks reveals the necessity of modern banks in today’s society. They proposed how to reduce banks’ vulnerabilities in case of a crisis, and how bank collapse accelerates the financial crisis. In particular, they said, "The insight of the winners has improved the ability to avoid serious crises and expensive bailouts."

Bernanke revealed for the first time the cause of the Great Depression bank run. Until he began his research, Milton Friedman claimed that the cause of the Great Depression was a "currency disturbance" in which the money supply rapidly increases or decreases. Additionally, Bernanke theoretically proved that bank runs contribute significantly to economic downturn. The Nobel Committee commented, "His insight broke the conventional wisdom."

Now, people are looking at Bernanke's past track record. One thing that draws attention is that Bernanke served as Fed chairman from 2006 to 2014. During the 2008 global financial crisis, the government introduced a Quantitative Easing policy to lower the U.S. key interest rate to zero. Also, the government released money into the market, purchasing large-scale government bonds. Therefore his study of the Great Depression became the theoretical basis for quantitative easing policies during the global financial crisis.

However, questions regarding the effectiveness of the quantitative easing policy (which caused inflation) remain. Edward Prescott, a professor at Arizona State University who won the 2004 Nobel Prize, said, "If you ask if quantitative easing helped economic growth, I will say no," adding, "But one thing Bernanke did well was to act as the last lender to prevent bank run risks after the September 2008 financial crisis."