Osborne: Banking on Carney?

Q: Who is Mark Carney: a politician, economist or manager?

A: Carney is currently the Governor of the Bank of Canada, having held the position since 2008. He also has a high international profile, as Chairman of the Financial Stability Board (FSB) and as a member of the Board of Directors of the Bank for International Settlements (BIS). Carney is also a member of the Group of Thirty, and of the Foundation Board of the World Economic Forum.

Carney has extensive experience in the private sector, having worked for thirteen years at Goldman Sachs in its London, Tokyo, New York and Toronto offices. He trained as an economist, receiving a bachelor’s degree in economics from Harvard University in 1988. He achieved a master’s degree in economics in 1993 and a doctorate in economics in 1995, both from Oxford University. He was born in Fort Smith, Northwest Territories, Canada.


Q: Why were people surprised at Carney’s appointment?

A: Carney was originally seen as a strong candidate, and was believed to be a favourite of the Chancellor George Osborne, but he publicly ruled himself out of the race in August. The Chancellor seems to have gone to extraordinary lengths to get his man – he approached the Canadian in February to ask him to apply, and successfully persuaded him to do so in September even after he had publicly declared that he was no longer interested.


Q: So why has Osborne chosen him?

A: As a Bank Governor with a track record of working successfully with a Government committed to austerity, it’s no surprise that Osborne regarded Carney as his No.1 choice. Carney enjoys a strong international reputation, thanks in part to his work with a number of international organisations, but in particular because of Canada’s track record in the wake of the financial crisis. As Carney noted: “many financial emperors around the world were seen to have no clothes. Canadian banks were comparatively draped in full winter regalia.”

He’s known for closely monitoring household finances and responding to squeezed household budgets – an issue that’s becoming increasingly important for the Government. He’s studied closely the impact of increasing commodity prices on domestic demand and, in response, he has used monetary policy to maintain that domestic demand.

Carney has said that he will seek UK citizenship in order to take up the role. Asked about this in Parliament, the Chancellor said that there should be no concerns about appointing a Canadian: “Canada is a G7 country. It’s one of our allies… it’s hard to think of a closer ally than Canada.” He also noted again that Canada has managed the fall out from the financial crisis better than most other Western economies.


Q: What does Carney have to say about Europe?

A: As is clear from the following speech, Carney has firm views on what Euro countries need to do to get the crisis under control. He emphasised that “To repay the creditors in the core euro area countries, the debtors of the periphery must regain competitiveness”, cautioning that this “will be neither easy nor quick.”

“Moreover, it is essential that the structural reforms now under way across the deficit countries boost productivity. … Bold steps are required to restore the single financial market. And bold steps are now under consideration. One example is the current European proposal to create a banking union. By centralising bank restructuring, re-capitalising banks with European rather than national resources, moving towards centralised (or federalised) supervisory oversight and harmonising (or better still mutualising) deposit insurance, Europe can break the increasingly toxic links between banks and sovereigns.”

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