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UK Names Canadian Carney as New Bank of England Chief

Monday, 26 Nov 2012 11:10 AM

 

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The British government has chosen Mark Carney, the head of Canada's central bank, to become governor of the Bank of England effective July 1.

Treasury chief George Osborne announced the surprise choice to the House of Commons on Monday. It is the first time since the Bank was founded in 1694 that someone who isn't British has been selected to lead the U.K.'s monetary authority. Osborne said Carney 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."

The Canadian, who is currently head of the G20's Financial Stability Board, had been speculated as a possible choice but was not considered a front-runner.

"I'm honored to accept this important and demanding role," Carney said at a news conference in Ottawa.

"It's a decisive period for reform of the global financial system including its leading financial center, 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 U.K.'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 Labor Party in the House of Commons, said Carney was "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.

The Canadian Carney is not the first ex-Goldman Sachs employee to lead a central bank, President of the European Central Bank Mario Draghi is also a former employee of the U.S. 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 U.K.," 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 U.K. 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 favorite 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.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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