Don't expect too much from the new Governor of the Bank of Englandby George Magnus / May 22, 2013 / Leave a comment
The UK economy is showing some signs of growth, but nothing like pre-crisis levels. The burden of public debt is still too great, andifficult reforms must be made to the structure of the economy. But who do we call?
The government’s answer is Mark Carney, who starts work as the new Governor of the Bank of England at the end of June. Carney, a Canadian, will take office in Britain as an unelected official in one of the most powerful financial and regulatory positions in the British economy. Once installed, he will find himself at the centre of a highly sensitive and political situation. The debate is raging in Britain—as it is in other countries buffeted by five years of financial crisis and slump—about how to restore the economy to robust growth and what role a central bank can play in this process. These are controversial questions; Carney will be expected to come up with answers.
When George Osborne announced his appointment late last year, he called him “the outstanding banker of his generation.” But Carney’s appointment is no mere technocratic assignment. The first foreign governor, he will come under strong pressure to shake up the Bank’s governance, culture and efficiency. With the government now more than half way through its term of office, can Carney deliver, or is the Chancellor piling an unrealistic weight of expectation onto his shoulders?
Carney is certainly a different kind of central banker from Mervyn King, whom he is replacing. Aged 48 and 65, respectively, they come from opposite ends of the baby boomer generation. King had a long and distinguished academic career prior to joining the Bank in 1990. Appointed Governor in 2003, he was previously the Chief Economist and, later, Deputy Governor.
Carney, in contrast, joined Goldman Sachs aged 23, becoming a senior executive. He then served as the Deputy Governor of the Bank of Canada, the central bank, and as a senior official at the Canadian Department of Finance. He became Governor of the central bank in 2008, and in 2011, Chairman of the G20 Financial Stability Board. At the Bank of England, Carney is expected to oversee the construction of a more robust, trustworthy financial system. He will have strong interests in the financial services (banking reform) bill that is working its way through parliament, but his principal task will be…