Canada’s top banker Mark Carney has been named the Bank of England’s new governor, becoming the first foreigner to lead the institution in its 318-year history.
In making the announcement Monday, Bank of England Chancellor George Osborne described Carney as “simply the best, most experienced and most qualified person in the world” to steer Britain’s families and business through the country’s mounting economic challenges.
Carney will continue in his role as Bank of Canada governor until June 1, 2013, Finance Minister Jim Flaherty confirmed during a news conference in Ottawa. His five-year term at the Bank of England begins July 1, 2013.
Since assuming his role at the BoC in 2008, Carney has been credited with helping Canada weather the global recession with confidence, tightening financial regulations and speaking candidly about debt.
Carney’s candour regarding both government and household finances even got the attention of Time magazine, which dubbed him the 21st most-influential person in the world in 2010. In 2011 Carney was name chair of the Switzerland-based Financial Stability Board, a part-time role in which he spearheads the G20’s efforts to improve the regulation of banks.
Flaherty conceded that Carney’s departure is a loss, but also pointed to the Bank of England role as evidence that Canada’s economic decisions are being held up as model for other countries.
“I appreciate the work (Carney) has done and the advice he has given to keep Canada’s economy strong, protect Canadian jobs and maintain the stability of our monetary system,” said Flaherty. “Canada’s economic and fiscal resilience during this period has been the strongest in the G7 and the envy of many in the international community.”
There had been persistent speculation that Carney was planning to take up a post with the Bank of England, replacing current governor Sir Mervyn King. Carney, however, denied those rumours in an August 2012 with CTV’s Chief Anchor and Senior Editor Lisa LaFlamme.
On Monday, Carney elaborated on the apparent about-face.
“I have been asked before about this,” he told reporters in Ottawa. “It’s been an on-and-off process … Every time I’ve been asked it has been an ‘off’ process.”
Carney said his appointment comes at an important time for the Bank of England.
“This is a critical time for the British, European and global economies. It’s a decisive period for reform of the global financial system and its leading financial centre in the city of London,” he told reporters.
While news of Carney’s appointment took the financial world by surprise, RBC Chief Economist Craig Wright said it was smart move for British politicians to look outside of the U.K. to fill the role.
“Part of the issue is in the U.K. a lot of the central banks and politicians have been tainted by the ongoing challenges in a period that’s been very slow and painful in terms of recovery,” said Wright, “He has a clean record on that front.”
Wright added that the depth of the recession and the magnitude of the challenges in the U.K. are significantly different than in Canada.
“It’s not just a bigger mandate in that the U.K., it’s a bigger economy. It’s also a broader mandate in terms of the whole regulatory environment,” said Wright.
Speaking to reporters Monday, Carney noted that his wife and children hold British and Canadian citizenship. “I’m not without ties to the United Kingdom,” he said.
While Carney is often credited with steering the country through the 2008-2009 recession, his departure from the Bank of Canada is not expected to have an effect on the business world, according to the head of the Canadian Chamber of Commerce.
“People recognize here it wasn’t a one man show,” said Perrin Beatty. “It was a combination of the government’s policies and the quality of the people at the Bank of Canada.
“He has a first-rate team of people behind him and I think what we’ll see is a good deal of continuity.”
Through a period of economic uncertainty, Beatty described Carney as an “unflappable” and “reassuring” figure.
“It’s one of the reasons the Brits wanted him,” he said. “They wanted someone who’s reputation is stellar, who was seen as a coup for them to be able to capture the attention of the world and he brings a reputation and confidence which is second to none.”
Carney holds a B.A. in economics from Harvard, as well as master’s and doctorate degrees from Oxford.
He spent 13 years working for Goldman Sachs, and was eventually named a managing director.
The Bank of Canada hired Carney as a deputy governor in August 2003. He moved onto become Senior Associate Deputy Minister of Finance in November 2004, before returning to the BoC.
On accepting his latest role at the Bank of England, Carney told reporters: “It was a difficult decision, but I think it was the right decision.”
