In a surprise announcement, the British government announced Mark Carney, the current Governor of the Bank of Canada, will be the next governor of the Britain’s central bank. This revelation underscores the desire for fresh blood and innovation at the powerful institution.
The shocking statement, which Chancellor of the Exchequer George Osborne made Monday afternoon, indicates there is a major disconnect in British government regarding the direction of financial policy in the United Kingdom; typically, fixtures of the British establishment have been appointed as governor. Months ago, Carney snubbed Osborne’s plea to assume the role of government, conceding only in the past 10 days. No non-British citizen has ever been appointed to the post of governor, and it is reported that Carney will apply for British citizenship.
The appointment also came as a surprise at the Bank of Canada, as Carney had confided his declination of the position in private, according to individuals familiar with the issue. Staff learned of the impending move this morning.
Carney will be leaving the relatively calm seas of Canadian finance and shifting to a tumultuous environment in Europe, as the Bank of England inherits sweeping powers, transforming it into one of the world’s most influential central banks, and enhancing the profile of the prospective governor.
Carney will be immediately confronted with a series of significant challenges: the U.K. economy has become moribund, and the banking system itself remains in an exceptionally precarious position, with taxpayers retaining majority positions in the two major banks.
Mark Carney will be the 120th Governor of the Bank of England beginning in 2013. The Loonie declined on news of Carney’s departure.
In my opinion, this announcement represents a significant change to British and Eurozone monetary policy rather than a major shift in Canadian economic policy. The fact of the matter is that in Canada, it will be more of the same. Although I do not agree with all the policies that Carney implemented, I believe that he was able to act aggressively and decisively to protect the Canadian economy in the pre- and post-recession period. Specifically, prior to the collapse of Lehman Brothers, Carney took to the initiative of slashing Canada’s benchmark rate by half a point, and then took the unique step of promising to hold rates there for more than a year, providing further stimulus to the economy. Perhaps one of the more significant changes will be the loss of star power. Carney is well respective within financial circles, partly for his aforementioned decisiveness, his policy making abilities, but also because of his ability to explain complex financial systems to the average person. Although there will be negative reactions to Carney’s departure, all his successor will need to do is ensure that they keep a steady hand on the direction of the economy rather than making significant or far-reaching policy changes. The Canadian economy continues to be one of the most insulated and protected in the world from catastrophic financial decline.
Regardless, if you’re thinking about making a switch, purchasing a home, or refinancing your mortgage, contact your REALTOR® & Mortgage Broker, or feel free to give us a shout, and We’ll be happy to chat.
REALTOR® and Senior Private Loan Specialist - Residential & Commercial
Century 21 Desert Hills Realty and EQ Lending Corp.
Broker/Owner of EQ Lending Corp.