Mark Carney is trading his role as Governor of the Bank of Canada for the top spot at the Bank of England. In a surprise announcement made this morning by Finance Minister Jim Flaherty, it was stated that Carney will succeed current BOE Governor Sir Mervyn King as England prepares to take on increased responsibility for the European recession.
Out of the Blue
Carney, who became the eighth governor of the BOC in 2008, is leaving his post a bit early – and completely unexpectedly. In fact, it was suspected last Spring that he may make this very move – allegations he had dismissed as false at the time. However, England has made it clear Carney’s track record of fiscal stability amidst uncertain economic conditions makes him the man for the job as the UK takes on a European regulatory role. Carney will take up his new post as of July 1 – a move Flaherty described as “bittersweet” in this morning’s announcement. It’s the first time a non-Brit has taken the Bank’s top spot, and the first time the position has been open to an application process.
An Ambitious Undertaking
His initial five-year term with the BOE will put him in the hot seat to right Britain’s own recession, and helm the Bank’s increased responsibility for its financial sector. He’ll also chair a new regulatory body that will monitor all banking and investment institutions, and lead up the Financial Policy Committee. Not only that, but Carney’s also tasked with reorganizing the current organizational hierarchy of the Bank, which was called out as destructive in a recent series of reports.
For Carney, the switch to the BOE offers the chance to make a historic mark on European financial reform, as England becomes a financial hub – what he calls a “crucial point in the Bank of England’s history”. Canadian investors, though, are fretting over his departure as questions arise over the artificially low interest rates we’re currently enjoying. However, experts aren’t anticipating an immediate spike as soon as he takes leave – with economic conditions still shaky amidst US fiscal cliff fears and a resettling housing market, stimulus measures are sure to stick around for some time yet.
Carney will remain as Canadian head until hopping across the pond this June. Then, it will be business as usual for the BoC recruiting team, who will seek out the next candidates for the job, with the final decision to come from the Federal Government.