Bank of England prepares for life after Mark Carney

Another non-British appointment is not ruled out

Mark Carney, governor of the Bank of England: search for successor has already begun.

Mark Carney, governor of the Bank of England: search for successor has already begun.

 

Philip Hammond, UK chancellor, is preparing to fire the starting gun on the process to select the next governor of the Bank of England to replace Mark Carney next year. 

The Treasury is expected to publish an advert for the job in July, a year ahead of the end of Mr Carney’s term, and the chancellor said he had already begun looking for candidates in forums such as the International Monetary Fund spring meetings in Washington. 

“The formal process has not yet started but I, and many other people I am sure, may have cast their eye around various rooms to see if any likely looking candidates hove into view,” Mr Hammond said on the sidelines of the meetings. 

His comments show the government, which selects the governor and deputy governors of the central bank, has not ruled out another non-British appointment and is seeking a figure who can make an impact on the global stage as the UK prepares for Brexit.

Intervention

Mr Hammond’s intervention will put pressure on the domestic frontrunner, Andrew Bailey, the Financial Conduct Authority chief executive whose career has not taken him far from the BoE — where he spent 30 years — or from Britain. 

So sure were people that Mr Bailey was likely to clinch the top job that Betway, the bookmakers, suspended betting on the position of governor last week.

The Treasury wants an open competition for the post and is seeking applications from well qualified candidates from around the world. 

This would be likely to include Ben Broadbent, the BoE deputy governor for monetary policy, who said in 2015, “I have no intention of going for the top job whatsoever”. His comment may recall Mr Carney’s own public disavowal of any interest in the role before he was appointed in 2013.

Mr Broadbent has warned that Brussels’ plans to shake up the rules governing asset managers after Brexit could fragment markets and raise costs.

Sir Jon Cunliffe, who is responsible for financial stability at the BoE, has an international presence having been Britain’s top official in Brussels and a long international contact list as the UK’s G7 and G20 sherpa for many years. 

Instincts

Paul Tucker, the former deputy governor passed over by George Osborne in 2012, is also thought to be interested. Sir Paul is about to launch Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State, in which he examines the difficulties independent and powerful central banks face in proving their legitimacy in democracies.

If Mr Hammond follows his predecessor’s instincts and wants a lively hard-hitter at the BoE, Shriti Vadera, the chair of Santander UK and a former business minister under Gordon Brown fits the bill. The Treasury does not consider Baroness Vadera, who sits on the cross benches in the House of Lords, to have been deeply committed to the Labour party when she was a minister.

Having been a key government figure in the financial crisis, Baroness Vadera is also credited with doing a good job in chairing a committee of City grandees, and later in helping to frame the UK’s position on Brexit and financial services. 

Other strong women candidates include Minouche Shafik, director of the London School of Economics and a former deputy governor of the BoE, and Sharon White, chief executive of Britain’s communications regulator Ofcom and a former top Treasury official. 

However, with Mr Hammond apparently set on finding a candidate with the same international cachet as Mr Carney, he might need again to look abroad. 

While officials have great respect for Janet Yellen, the former Federal Reserve chair, she might feel the BoE is a step down from the US central bank.

Attracting Raghuram Rajan, the highly respected Chicago-based economist and former Reserve Bank of India governor, would be a coup, as would securing Agustín Carstens, Mexico’s central bank chief and the new general manager of the Bank of International Settlements. Mr Carstens is an intellectual heavyweight in the central banker community.

Those who might replace Mark Carney

Andrew Bailey — chief executive of the Financial Conduct Authority

Pros: Previously a deputy governor of the BoE, he remains the domestic favourite with huge loyalty and respect among BoE staff. A safe pair of hands

Cons: Might be seen as the dull choice. Lack of international experience and monetary policy experience

Ben Broadbent — deputy governor for monetary policy

Pros: A lively mind on monetary policy and an internationally respected economist

Cons: A reputation for disorganisation. Goldman Sachs background makes him hard to sell as a man of the people

Shriti Vadera — chair of Santander UK

Pros: Lived through the financial crisis and a dynamic manager who gets things done

Cons: Dogged by criticisms of her abrasive working style. Lack of monetary policy experience

Andy Haldane — BoE chief economist

Pros: One of the world’s most exciting thinkers on economics. Substantial financial stability experience

Cons: One of the BoE’s least disciplined speakers could undermine the delicate task of central bank communication

Minouche Shafik — director of the London School of Economics

Pros: BoE and international experience having held the deputy managing director job at the IMF

Cons: Left the BoE deputy governor job after only three years to go to the LSE with limited achievements to her name

Raghuram Rajan — University of Chicago professor 

Pros: Impeccable international economics and central banking experience. Significant achievements at the Reserve Bank of India

Cons: No indication that he would want the job at the BoE