Canadian to be Bank of England governor

Canadian central bank chief Mark Carney will be the next governor of the Bank of England, George Osborne has told MPs. He will succeed Sir Mervyn King when his term ends next July.

The surprise decision makes a foreigner the most important unelected official in Britain. Mr Carney has impressed the chancellor with his experience, gained in the Bank of Canada and as head of the Financial Stability Board, the regulatory body based in Basel that sets international banking rules.

The news was unexpected, as Mr Carney had said in recent months that he had not applied for the job. He has indicated that he will seek to become a UK national.

Challenge

“I am going to where the challenge is greatest,” he said in Ottawa yesterday.

When Mr Carney takes over at the BoE, top of his agenda will be the hangover from the financial crisis, a chronically weak economy and a still-fragile banking system.

He will have to integrate banking supervision into the central bank and will face pressure to shake up the BoE’s fierce hierarchies and weak governance.

In selecting Mr Carney to serve at the helm of the Old Lady of Threadneedle Street, the chancellor has picked an outspoken former Goldman Sachs banker with expertise in central banking and international financial regulation.

“Mr Carney is unique amongst the potential candidates in combining long experience of central banking, huge international credibility in economics, deep expertise in financial regulation and a first-hand experience of private sector financial institutions,” said Mr Osborne.

Prestigious

“He is acknowledged as the outstanding central banker of his generation and I believe he will bring the strong leadership and external experience the bank itself needs as it takes on its heavy new responsibilities for regulating our banking system,” he added.

Mr Carney told the chancellor he would serve for five years rather than the non-renewable eight-year term outlined in the legislation.

The prestigious post will afford Mr Carney perhaps the most influential unelected voice in the UK. Once fresh legislation is finalised, the BoE will have responsibility for controlling demand and inflation, stability and health of banks and insurance companies.

The task of integrating the BoE with parts of the Financial Services Authority comes with demands for the removal of excessive deference and hierarchy from the BoE’s culture, outlined in recent internal reviews.

Former chancellor Alistair Darling said: “Throughout many G8/G20 meetings [Mr Carney] had a clear grasp of what had gone wrong and what to do. He knows the UK and brings international experience. And the bank needs a new broom.” – Copyright The Financial Times Limited 2012