George Osborne’s shock move on new Bank of England chief as Canadian is hailed as ‘best man’ for job
CHANCELLOR George Osborne surprised the City and politicians yesterday when he unveiled Mark Carney, a Canadian, as the new Governor of the Bank of England, the first foreign national and youngest man to hold the post in its 318-year
But the Chancellor, who pursued the governor of the Bank of Canada to replace Sir Mervyn King and was initially turned down, said Mr Carney was the best man in the world for the job.
After advertising the £300,000-a-year post for the first time and despite
attracting a strong field for the job, it is understood that Mr Osborne deliberately set out to get Mr Carney, going back to him after he turned the job down in the spring this year.
The announcement in the Commons took almost everybody by surprise, with the Bank’s deputy governor, Paul Tucker, widely expected to be named for the top post.
While the Chancellor said he hoped Mr Tucker would stay as deputy governor, there was speculation that his failure to stop the Libor scandal finished his chances of getting the top job.
It is also understood that Mr Carney’s success in preventing a banking crisis in Canada similar to the one that gripped the UK, United States and much of
Europe put him at the top of the Treasury’s list.
His record had already led to him being appointed head of the International Financial Stability Board, despite being the youngest head of a central bank in the world.
Mr Osborne’s decision to go abroad and find “the best man for the job” met with approval from across all parties.
Shadow chancellor Ed Balls welcomed the incoming Governor as a “good choice, good judgment”. Tory chairman of the Treasury Select Committee Andrew Tyrie said that Mr Carney “ticks all the boxes”.
Liberal Democrat president Tim Farron tweeted: “He [Carney] is widely regarded as the best central bank governor in the world. Big coup for the
And Tory London mayor Boris Johnson said the appointment would be good news for the City.
“He has a proven track record as governor of the Central Bank in Canada and possesses great knowledge and understanding of the global economy and, most importantly, the world’s financial sector,” he said. “Given the pre-eminence of London’s financial sector worldwide, that experience is very welcome.”
Mr Carney will succeed Sir Mervyn when he steps down next June, but before then he faces a grilling from the Commons Treasury select committee, the first time an incoming
Governor has been questioned by MPs prior to taking up office.
The appointment was dubbed a “huge surprise” and “unprecedented” by experts.
Announcing Mr Carney, Mr Osborne told the Commons: “He has got what it takes to help bring families and businesses through these incredibly challenging economic times.”
The job Mr Carney is due to take on will soon become even more powerful, with the Bank of England taking on extra responsibilities for banking supervision as part of an overhaul of financial regulation following the economic crisis.
Mr Carney, 47, a former investment banker at Goldman Sachs, will be responsible for setting interest rates, regulating banks and heading a new committee designed to spot and ward off future crises.
He is the first Governor in the Bank’s 318-year history to be appointed after an open recruitment process, in which the role was advertised and candidates interviewed by a panel.
Speaking from Canada yesterday, he said: “This is a critical time for the British, European and global economies, a decisive period for reform of the global financial system, including its leading financial centre, the City of London, and a crucial point
in the Bank of England’s
history as it accepts vital new
Canadian-born Mr Carney intends to take on British citizenship to serve as governor for five years, the Treasury said.
Mr Carney took up his post as Bank of Canada governor in the depths of the crisis in 2008. At the time, he was the youngest central bank governor among the G8 and G20 groups of nations and was named one of the world’s most influential people by Time magazine in 2010.
But it is the 13 years Mr Carney spent at investment banking giant Goldman Sachs that may raise an eyebrow. He worked for the US firm – now synonymous with excessive pay and risky banking – in London, Tokyo, New York and Toronto offices.
Philip Shaw, economist at Investec, said the Chancellor “sprang a huge surprise” with the announcement. He added: “Mark Carney is a surprise choice, but he is a highly respected central banker.”
Mr Carney will continue as central bank governor in Canada until the end of May next year and will remain chair of the global Financial Stability Board until 2018.
Mr Osborne said the new governor’s pay and benefits would be determined by the non-executive members of the Court of the Bank of England and would be “broadly equivalent” to Sir Mervyn’s package.
He is expected to receive a relocation package to move to the UK with his British wife, Diana, and four children, who have dual nationality.
Sir Mervyn said: “I am delighted to welcome Mark Carney as my successor. He represents a new generation of leadership for the Bank 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.”
Mr Tucker, who joined the Bank in 1980, was the bookies’
favourite. He was dragged into the Barclays rate-rigging scandal after the bank’s former boss, Bob Diamond, published a record of a contentious phonecall with the deputy governor.
He fiercely denied that he had sanctioned the bank’s efforts to manipulate its borrowing costs downwards and survived a grilling on the issue by MPs.
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