Richard Andreas Werner (born 5 January 1967) is a German banking and development economist who is a university professor at University of Winchester.
He has proposed the "Quantity Theory of Credit", or "Quantity Theory of Disaggregated Credit", which disaggregates credit creation that are used for the real economy (GDP transactions), on the one hand, and financial transactions, on the other hand. In 1995, he proposed a new monetary policy to swiftly deal with banking crises, which he called 'Quantitative Easing', and it was published in the Nikkei. He also first used the expression "QE2" in public to refer to the need to implement 'true quantitative easing' as an expansion in credit creation.<ref>Richard Werner, "Keizai Kyoshitsu: Keiki kaifuku, ryoteiki kinyu kanwa kara," Nikkei, 2 September 1995. ‘QE2’ was first used publicly by Richard Werner live on CNBC on 22 September 2009. He argued that 'true quantitative easing' was needed, namely an expansion in productive credit creation. This required a second attempt by central banks, "a kind of QE2". Squawkbox, CNBC, live studio panel, 18:00-21:00 hrs London time, 22 September 2009. Meanwhile, the expression is today mainly used to refer to a second round of what Prof. Werner would consider the 'wrong type' of QE.</ref> His 2001 book Princes of the Yen was a number one general bestseller in Japan. In 2014, he published the first empirical evidence that each bank creates credit when it issues a new loan.
Early life
In 1989, Werner earned a BSc in economics at the London School of Economics (LSE). During his postgraduate studies at Oxford University he spent over a year in Japan, studying at the University of Tokyo and working at the Nomura Research Institute. His DPhil in economics was conferred by Oxford. In 1991, he became European Commission-sponsored Marie Curie Fellow at the Institute for Economics and Statistics at Oxford. His 1991 discussion paper at the institute warned about the imminent 'collapse' of the Japanese banking system and the threat of the "greatest recession since the Great Depression". In Tokyo, he also became the first Shimomura Fellow at the Research Institute for Capital Formation at the Development Bank of Japan. He was a visiting researcher at the Institute for Monetary and Economic Studies at the Bank of Japan; and he was a visiting scholar at the Institute for Monetary and Fiscal Studies at the Ministry of Finance.
Career
Werner was chief economist of Jardine Fleming from 1994 to 1998 and published several articles on the Japanese credit cycle and monetary policy, many of which are in Japanese. He joined the faculty of Sophia University in Tokyo (1997-2004) as a tenured assistant professor. Werner was senior managing director and senior portfolio manager at Bear Stearns Asset Management. He worked at the University of Southampton (2004-2018), mainly as Chair and Professor in International Banking. Werner becomes Professor of Banking and Finance at De Montfort University in 2018. He is the founding director of the university's Centre for Banking, Finance and Sustainable Development and organiser of the European Conference on Banking and the Economy (ECOBATE), first held on 29 September 2011 in Winchester Guildhall, with Lord Adair Turner, FSA Chairman, as keynote speaker. From 2011 to 2019, he was a member of the ECB Shadow Council.
Werner has developed a theory of money creation called the Quantity Theory of Credit, which is in line with Schumpeter's credit theory of money. He has argued, since 1992, that the banking sector needs to be reflected appropriately in macroeconomic models since it is the main creator and allocator of the money supply, through the process of credit creation by individual banks.
Werner's book Princes of the Yen, about the modern economic development of Japan, including the bubble of the 1990s and subsequent bust, was a number one general bestseller in Japan in 2001. The book covers the monetary policy of the Bank of Japan specifically and central bank informal guidance of bank credit in general.