Ibrahim Apekhade Yusuf with agency reports recalls the intrigues that led to the Canadian-born Mark Carney as the popular but surprise choice for governor of Bank of England (BoE) in 2012
BRITAIN is perhaps one of the countries that have had to outsource the job of the governor of their central banks to an outsider.
Of course, the decision was taken as the Chancellor of the Exchequer, George Osborne, said was in the interest of the economy.
When, for the first time, the position was advertised in early 2011, leading to a shortlist of five persons being interviewed, the advert called for a candidate who could: “successfully lead, influence and manage the change in the Bank’s responsibilities, inspiring confidence and credibility both within the Bank and throughout financial markets.
“The successful candidate will have experience of working in, or with, a Central Bank or similar institution; or will have worked at the most senior level in a major bank or other financial institution. He or she will demonstrate strong leadership, management and policy skills; will have an advanced understanding of financial markets and good economic knowledge. He or she will be a strong communicator, have good interpersonal skills and will be a person of undisputed integrity and standing.”
Headhunting abroad
But what many Britons probably didn’t know at the time was that Osborne was carefully headhunting for Mark Carney, who was then serving as Governor of Central Bank of Canada.
Osborne had been chasing Carney since early 2011, when he first floated the idea with the Canadian at a G20 summit in Mexico.
He had asked him officially in mid August 2011. Carney said no. He still had 18 months left in the job. He didn’t want to do the eight-year term Osborne was stipulating. And that was before one even considered the notion of becoming the first non-UK Governor in the Bank of England’s 318-year history.
But then, Osborne made another approach. This time around, he sold the prospect more aggressively. He said that if Carney insisted, he would reduce the term to five years after all, the main principle was to have a single term rather than opening up the messy question of reappointment as had happened after Sir Mervyn’s first term.
This time around, Carney didn’t say no. Outlandish as the prospect of the appointment was, he was interested. Expectedly, Carney was reported to have made a surreptitious visit to London, in time to be interviewed by the Treasury/Bank of England panel and by Osborne himself.
Carney, a Canadian, whose home town is Fort Smith, in the northwest territories, which is on the banks of the Slave River, has a population of 2,500, where he lived there till he was six years old, when the family moved to Edmonton.He attended Harvard University, where he was the reserve goalkeeper of the ice hockey team.
His wife, Diana, whom he met at Oxford, has joint Canadian-British citizenship as do their four daughters.
Critics say he wears his Oxford doctorate on his sleeve and is less than self-effacing. They speculate that his 13 years at Goldman Sachs, which took him to London, Tokyo, New York and Toronto, inspired his smart dress sense and air of authority. Yet, he is not brash, preferring to make few public comments and he rarely agrees to interviews.
But he made the headlines in the financial press in 2011 when he came under attack from JP Morgan boss, Jamie Dimon, during a meeting of the then G20 Financial Stability Board, set up to tame the banks in the aftermath of the financial crisis.
Vote of confidence for Carney
Shortly after the choice of Carney was announced as head of the Old Lady, a euphemism for the Bank of England, many Brits and their counterparts in Canada expressed optimism over Carney’s choice.
To Mr. David Cameron, Prime Minister of Britain, who described Carney as ‘exceptional’ choice, he said he was delighted that Mark Carney has accepted the chance to take the controls at Threadneedle Street.
The PM said: “I am delighted that Mark Carney has accepted the job as the next Governor of the Bank of England. He takes up the role at an important time, as we put the Bank of England back at the heart of financial regulation, so that we do not repeat the mistakes of the past.
“His distinguished record on economic policy, the high regard of his international peers and the leadership he has shown on the global economic crisis make him the exceptional person for this job. I very much look forward to working with him from next summer.”
Carney isn’t the only central banker with a stint at Goldman Sachs on the CV either — Mario Draghi, head of the European Central, also spent several years there.
And Draghi, of course, was Carney’s predecessor as head of the Financial Stability Board.
Alistair Darling, the former Chancellor of the Exchequer, also added his voice to the chorus of people hailing the arrival of Mark Carney at the time.
Speaking on Channel 4 News, Darling said: “I worked very closely with Mark Carney during the financial crisis…He stuck out from other central bankers in his understanding of the crisis and what needs to be done about it. We had to get the best candidate…this is a very good appointment.”
David Blanchflower, the economist and former member of the Bank of England monetary policy committee, was also on the same page with Darling, saying, “You hire the best person with the best CV, and Carney’s that person.”
Back in the UK, Liberal Democrat president, Tim Farron, warmly welcomed Carney’s appointment as his tweets suggested: “He is a great choice though. He is widely regarded as the best central bank governor in the world. Big coup for the government…He has a hard job ahead, but he’s very qualified and experienced.”
The CBI equally welcomed the news that Mark Carney is the next Governor of the Bank of England.
Katja Hall, CBI chief policy director, said: “His strong track record as the Canadian Central Bank Governor and extensive experience in international financial regulation mean that he is well positioned to guide Britain through challenging economic times. We look forward to working with and supporting him in his new role.”
The former governor, Sir Mervyn King, who many pundits thought was actually rooting for Paul Tucker, his deputy, cheerfully accepted the decision to appoint Mark Carney.
In a statement, King said: “He represents a new generation of leadership for the Bank of England, and is an outstanding choice to succeed me. Since Mark became Governor of the Bank of Canada, I have worked closely with him and admired his contributions to the world of central banking, in which he is widely respected.”
Few dissenting voices
The decision to appoint a Canadian to run the Bank of England was not without some hiccups, as some Brits literally played up the racist card.
“Why not British? To whom does he owe his allegiance in his heart? Then again, many who sold us off, financially, economically and politically are supposed to be British. Mark Carney is a good choice. However, it is a sad indictment of the UK economics and finance professions that it could not conjure a suitable candidate. Very sad,” as one commentator summed it up.
Meanwhile, Ann Pettifor didn’t jump on the Carney bandwagon, arguing that his appointment means “more of the same”: “There is nothing in his speeches that indicates that he will help give Britain’s real economy the protection it needs from its over-mighty and still very dangerous banking sector.
“Nothing, in other words, that indicates the real economy the productive sector will be given priority over the city’s preference for reckless global speculation. Instead, like many others who adopt a “market-based” approach to regulation, Carney prefers to tinker retrospectively with the capital ratios of banks.”
TUC General Secretary Brendan Barber at the time also reckoned that Carney has an almost impossible task, given the state of the UK economy.
Barber said: “The Chancellor seems to have outsourced the job of getting the economy moving to the Bank of England but the Bank is now running out of monetary ammunition. Interest rates are about as low as they can get, and quantitative easing, while welcome as far as it goes, is not doing much to boost the real economy.”
But Osborne replied his critics, saying Carney’s appointment is a sign of Britain’s confidence that we can go and get the best person for the job, across the globe.
“Canada is a G7 country. It’s one of our allies…it’s hard to think of a closer ally than Canada,” Osborne stressed, adding matter-of-factly that Canada had a rather better crisis than the UK.
As governor of the Bank of Canada, Carney is thought to have had a “good crisis”.
Canadian banks weathered the storm better than most, seen in part due to the regulation of the Bank of Canada.
Osborne adds that Mark Carney is the outstanding, preeminent central banker of his generation, and the right man to take control of the Bank.
Osborne further revealed that Carney will serve for five years (not the eight years that were advertised), and is keen to appear before the Treasury Committee of the House of Parliament to discuss UK monetary policy, noting that Carney will bring ‘fresh perspective’ to the Bank of England, and help UK businesses and families through the tricky economic times ahead.
How Canadians reacted
Canadian’s are taking the loss of Mark Carney stoically, up to a point, anyway.
Jonathan Rose, professor at the Department of Political Studies at Queen’s University at Kingston, Ontario, argued that Carney is taking a backward step: “So sorry to hear about Mark Carney’s demotion to the Bank of England.
“Canada is losing a super star who could see across political lines for the good of Canada. I’m very sorry to see him go because of his integrity and leadership in the financial world,” said a Canadian.
Another concurred: “I must say congratulations to Mr. Carney. I am sure that he will be fantastic in his new role. It is sad to see him leave, but love him or hate him; he has done an amazing job.”
Benefits of Carney’s appointment
Carney’s appointment did not cause any ructions in the financial markets. Amusingly, the pound did hit a two-and-a-half-week high against the Canadian dollar on the news.
