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UK picks Canadian to lead Bank of England

Tuesday 27 Nov 2012 12:18 p.m.

By Robert Barr and Rob Gillies

The British government has chosen Mark Carney, a Canadian, to become governor of the Bank of England, the first time a foreigner has been tapped for the position since the central bank was founded in 1694.

Treasury chief George Osborne announced the surprise choice to the House of Commons on Monday, saying Carney - who is currently the head of Canada's central bank - would apply for British citizenship.

"Mark Carney is the outstanding candidate to be governor of the Bank of England and help steer Britain through these difficult economic times," Osborne said. "He is quite simply the best, most experienced and most qualified person in the world to do the job."

Besides his job as a central banker, Carney is also head of the G-20's Financial Stability Board, a global supervisor, and spent 13 years at Goldman Sachs. He had been speculated as a possible choice but was not considered a front-runner.

"I'm honoured to accept this important and demanding role," Carney, who will start July 1, said at a news conference in Ottawa. "It's a decisive period for reform of the global financial system including its leading financial centre, the City of London. And it's a crucial point in the Bank of England's history as it accepts vital new responsibilities."

Carney will succeed the current governor, Mervyn King, when his term ends next year. As well as chairing the committee which sets the UK's main interest rate, the governor will be given the new responsibility of supervising the country's banking industry. Carney told Osborne that he will only serve five years of the usual eight-year term.

King said Carney was "an outstanding choice" and represents "a new generation of leadership."

Ed Balls, economic spokesman for the opposition Labour Party in the House of Commons, said Carney "has a track record of handling tough and complex challenges" and is "a good choice."

Osborne had boasted that this was the first time that the Treasury had advertised the governor's job, but Carney said he hadn't applied.

"I didn't apply as part of the formal process to the position," he said. "These discussions really only intensified in the last two weeks."

Carney, 47, was appointed to a seven-year term as governor of the Bank of Canada in February 2008. He will step down on June 1.

He gained a bachelor's degree in economics from Harvard University in 1988, and master's and doctoral degrees in economics from Oxford University.

Carney was employed by Goldman Sachs for 13 years, working in London, Tokyo, New York and Toronto, before being appointed deputy governor of the Bank of Canada in 2003.

Carney is not the first ex-Goldman Sachs employee to lead a central bank. The president of the European Central Bank, Mario Draghi, is also a former employee of the US investment bank.

"I'm not without ties to the United Kingdom. My wife is a British and Canadian national. My children are both. I lived there for a decade. I know a lot of people in the City, in industry, in the UK," Carney said.

"Obviously I think I can play a constructive role as the next governor in relaunching this institution with its new responsibilities, contributing to price stability, to financial stability and to insuring that the rebalancing of the UK economy, which is under way, but is seen through over the course of the next five years."

Paul Tucker, one of the two deputy governors of the Bank of England, had been the betting favourite to become governor. Osborne said he hoped Tucker would remain at the bank, adding that he had extended the term of the other deputy, Charles Bean, for another year until mid-2014.

With Bean's time running short and a disappointed Tucker possibly ready to leave, "today's appointment could well usher in a period of significant upheaval at the Bank of England," said Philip Shaw, chief economist at Investec Securities.

Canada's commodity-rich economy has experienced a better market rebound than the other G-7 nations. The country did not suffer from a mortgage meltdown or subprime lending crisis during the Great Recession of 2008, and its banks are rated among the soundest in the world.

Canadian Prime Minister Stephen Harper on Monday praised Carney for his work in helping the government steer his country away from the worst impact of the global economic woes.

AP

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