Bank of England to hand reins over to Canadian in 2013

Business banking news review: week ending 29 Nov 2012

For the first time in over 300 years, the Bank of England made news this week when it selected a Canadian to oversee the UK’s central bank from 2013.

The entire country most likely thought Chancellor George Osborne was taking the piss out of everyone by making the announcement that he’s tapped a Canuck for the position of Bank of England’s new Governor, who will take the place of Sir Mervyn King when he steps down next year. Mr Carney is the first individual in the entire history of the Bank – all 318 years – to hold the illustrious title and not hold British citizenship.

The decision for Mr Carney to take the top spot at the Bank comes as a surprise, as the Canadian banker had recently ruled himself out as a candidate for the position. Scuttlebutt had that Paul Tucker, the Bank’s current Deputy Governor, was slated to succeed Sir Mervyn, but Chancellor Osborne instead tapped Mr Carney for the position, though he Canadian will only serve five years of the traditional eight year term.

Mr Osborne called Mr Carney an ‘outstanding central banker’ in a statement to the House of Commons, remarking that the Canadian will bring the kind of external experience and strong leadership the Bank so badly needs in order to continue to drive economic recovery. Mr Carney, as a potential candidate, was unique because of his experience in managing financial institutions in the private sector, his deep financial regulation expertise, how much credibility he has on the international economic stage, and his long central banking experience, the Chancellor added.

As Governor, Mr Carney will not just oversee the Monetary Policy Committee, which has been in the news for years now thanks to their decision to keep the base rate at its incredibly low 0.5 per cent interest rate, but also will be responsible for the Financial Policy Committee as well. The FPC, a new committee, will have the express task of ensuring the financial stability of the country through policy decisions from 2013.

Mr Carney said he was ‘honoured’ to be appointed by the Chancellor, remarking that he was ready, willing, and able to meet the highly challenging environment. Meanwhile, on this side of the Atlantic, industry experts say that Mr Tucker being passed over is likely to be interpreted as ‘a slap in the face,’ especially with a Canadian being brought into the fold.

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