Who Is the Surprise New Governor of the Bank of England?
London, UK - 26th November 2012, 18:50 GMT
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In a surprise move, Sir Mervyn King's successor at the Bank of England has been named as Mark Carney, present Governor of the Bank of Canada. He beat the present Bank of England deputy Paul Tucker to the role, as well as other distinguished candidates including Santander bank's UK chairman Lord (Terence) Burns, Sir John Vickers -- a former Bank of England economist who put his name to the UK government’s review on banking reform -- and Lord (Adair) Turner, chairman of the Financial Services Authority.
The Old Lady of Threadneedle Street, Bank of England
Governor Carney -- a distinguished member of the ATCA 5000 -- said it's an honour to take over in London: "I am honoured to accept this important and demanding role and to succeed Sir Mervyn King with whom I have worked closely over these past five years and from whom I learned so much. 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 responsibilities. The five-year term is the opportunity to see through the path of that reform, to see through the transition and the rebalancing of the UK economy and also to relaunch the Bank of England with its much expanded and vital responsibilities."
The British pound surged instantly when the announcement was made at 3:30pm GMT. Carney has built up an international reputation as a leader in financial institutions reform in the aftermath of the world recession which began in 2008. This is the first time a foreign national has been selected to head the Bank of England, which is still in crisis mode as the European economies remain in the doldrums, underlining how unconventional this appointment is.
Canada has the best record for fiscal stability in the G7. Carney is credited with shielding Canada's economy from the worst of the financial crisis which began in 2007, with none of the country's banks needing bail-outs. He has also recently said that banks should use their profits to boost capital rather than pay bonuses. Carney has a certain amount of intellectual and emotional distance from the banking world he inhabits. He said the Occupy anti-capitalist protesters were engaged in a "democratic expression of views'' and were "entirely constructive".
In the Bank of England -- the second oldest central bank in the world established in 1694 -- Carney inherits an institution that has kept its benchmark lending rate at 0.5 percent since March 2009 to aid the British economy. Annual inflation has outpaced the central bank’s 2 percent goal every month since the end of 2009, with consumer prices rising 2.7 percent in October. Carney will take over a newly empowered institution in Jun 2013 after the BoE is given new powers to regulate banks. The BoE is also taking increased responsibility for UK financial companies and entities. The current bank regulator -- the Financial Services Authority (FSA) -- will be dissolved and a new Prudential Regulatory Authority will oversee all deposit-taking institutions, insurers, investment banks and clearing houses. It will operate under a board chaired by Carney, who will also lead the Financial Policy Committee, charged with addressing risks to the broader financial system. In addition to those new regulatory powers, Carney will have to grapple with the Bank of England’s response to three reports commissioned by its governing body that criticised its hierarchical culture under King.
Carney also currently serves as Chairman of the Group-of-Twenty or G20's Financial Stability Board (FSB) and as a member of the Board of Directors of the Bank for International Settlements (BIS). He is also a member of the Group of Thirty, of the Foundation Board of the World Economic Forum, and a distinguished member of the ATCA 5000.
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