Monday, November 26, 2012

Canada's Carney to become Bank of England governor

    The U.K. government has appointed Mark Carney, the highly-regarded governor of the Bank of Canada (BOC), as the next governor of the Bank of England (BOE), surprising commentators that had put their money on Paul Tucker to replace Sir Mervyn King on July 1, 2013.
    Tucker, deputy governor at the BOE, had topped the list of candidates to replace King, who retires after 10 years as governor, after Carney had said he would not be applying for the job.
    “Mark Carney is the outstanding candidate to be Governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job," U.K. Chancellor of the Exchequer George Osborne said in a statement, adding Carney has indicated he intends to serve a five year term.
    Carney has headed the BOC since February 2008 and is also chairman of the Financial Stability Board (FSB), which monitors and promotes global financial regulation. Carney is familiar with the United Kingdom, having a masters and doctorate in economics from Oxford University and worked for Goldman Sachs in its London, Tokyo, New York and Toronto offices.
    As a Canadian, Carney is a subject of The Queen and the UK Treasury said he had indicated that he would apply for British citizenship. He is married to a British citizen.
    Carney said in a statement he was "honoured to accept this important and demanding role," adding:
    "This is a critical time for the British, European and global economies; a decisive period for reform of the global financial system including its leading financial centre, the City of London; and a crucial point in the Bank of England’s history as it accepts vital new responsibilities.”
     Canada was one of the few countries that escaped the worst ravages of the global financial crises, mainly due to tighter banking regulation that limited the exposure of Canada's banks to property. The country's economy has bounced back strongly after 2009, expanding 3.2 percent in 2010 and 2.4 percent in 2011 compared with anaemic UK growth of 1.8 percent in 2010 and 0.8 percent in 2011.
    "He has done a brilliant job for the Canadian economy as its central bank Governor, avoiding big bail outs and securing growth," Osborne said.
    Carney's experience at the FSB was also a draw for the UK as the Bank of England is set to be put back in charge of financial stability and banking regulation next year.
    "Mark Carney is the perfect candidate to take charge of the Bank as it takes on these vital new responsibilities. He will bring strong leadership and a fresh new perspective...We needed the best – and in Mark Carney we’ve got it,” Osborne said.
    The candidacy of Tucker, who has been with the BOE for 30 years and responsible for financial stability, was hurt after he was criticized for his failure to recognize that banks were rigging the LIBOR interest rate. Phone calls from 2008 showed that Tucker was in close contact with Barclays chief executive Bob Diamond who has resigned.
    In addition to Carney's appointment, the UK Treasury said Charles Bean had been reappointed as deputy governor for monetary stability to help the BOE in its expanded role and the transition to Carney. Bean has asked to leave his job on June 30, 2014.
    The Bank of Canada's board will shortly form a special committee with independent directors to look for a successor to Carney. Governors of the BOC are appointed by the independent directors, subject to approval by Canada's government.


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