Central Bankers to Blame for Crisis: Author

Central bankers are to blame for the current financial crisis, according to Andrew Smithers, author of "Wall Street Revalued" and founder of Smithers & Company. He suggests they employ different policies so further crises will be prevented.

"The major blame for the current financial problems lie in bad central banking," Smithers told CNBC Monday.

One theory that's been proven incorrect, Smithers said, is the idea that assets can't be valued and that if their prices should collapse, it wouldn't matter because "central bankers could cure the problems readily after the event."

According to Smithers, in early 2000 he warned that the policies that central banks, particularly in the U.S., were employing were going to lead to "very severe problems."

"If we are going to solve the problems — i .e. , not have a repetition of the sort of problem we're having recently — then what you need to do is change central banking policy to adjust to asset pricing," Smithers said. "Asset prices can no longer be ignored," he said.

Central banks need to target inflation, asset prices and ordinary day-to-day prices, he told "Squawk Box Europe."

He said there is a need for "another policy weapon" aside from interest rates and suggests using "variable ratios for bank equity" — "so that if you get a situation when asset prices are getting out of control, then you require higher equity ratios for banks."