Hungarian-born billionaire philanthropist George Soros announced on Tuesday that he will spend $ 50 million over the next ten years to set up and operate a new economic think tank in Hungary.
Addressing the Hungarian Academy of Sciences, Soros said the institution would aim to renew economic theory, carrying out educational as well as research tasks.
The think tank, to be called the Institute of New Economic Thinking, or Inet for short, would be financed through the Central European University, which was founded by Soros. He said he would not be personally involved in research at Inet, although his economic theory of “reflexivity” would be among the subjects studied there.
Soros said the global financial system must be fixed, but the time is not right for permanent reform as near-equilibrium conditions have to be reached first. He said the economy has to be first stabilized through increasing state debt and expanding the monetary base and only afterwards should the monetary base be reduced and the regulatory framework revamped. Future reforms might need to include restricting or banning some derivatives like credit default swaps and knockout options which could create hidden imbalances, he added.
Once the financial system reaches a state of near-equilibrium, regulatory authorities must take an active role in preventing asset bubbles, even at the cost of erring at times, Soros said. (MTI-ECONEWS)