Bungling People’s Bank of China handed ‘Mistake of the Year’ by unique Edinburgh library
“Their keynote reflation project was abandoned within six months because the more money they created from buying bonds the more capital outflow they triggered” – Professor Russell Napier
China’s central bank has been awarded the financial “Mistake of the Year” at a ceremony in Edinburgh.
The People’s Bank of China was presented with the unwelcome accolade by the city’s Library of Mistakes over its crossed-purposes and conflicted handling of growth and currency management in the latter half of 2024.
The Mistake of the Year is given by the free-to-use public library for the mistake in a finance or business context that either through size or significance is notable and also for the lessons that can be learnt from the error. The award to People’s Bank of China, given at a ceremony in Edinburgh hosted by keeper of the library Professor Russell Napier, is said to have been granted because of the “sheer size of the error”, and because the effects of the mistake were almost immediate.
Napier said: “The bank had spent the last 30 years managing its exchange rate but in August it suddenly announced that it would be simultaneously engaged in expanding its balance sheet by buying bonds without reference to conditions in the foreign exchange market. In effect it was adding more money into the system regardless of what was happening to the exchange rate and that was not consistent with its exchange rate targeting policy.
“Their keynote reflation project was abandoned within six months because the more money they created from buying bonds the more capital outflow they triggered thus putting downward pressure on the exchange rate. Therefore, because it shows a lack of understanding of financial history and the consequences of ignoring financial history, and the fact that this was all achieved within a six-month period, this is why this year’s winner of Mistake of the Year is the People’s Bank of China.”
The Library of Mistakes is a free-to-use public library dedicated to the study of financial history, with an outreach and education programme that includes courses, events and podcasts. Founded ten years ago in Edinburgh, the library now has branches in Switzerland and India and is opening an outpost later this year in Singapore. As a charity, all revenues go back into funding the library’s core aims of promoting financial education.
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