By Christopher Sands
Governor of the Bank of Canada Mark Carney has been selected as the next Governor of the Bank of England, a bold move by one of the world’s oldest central banks that could pay dividends for Britain and for Europe.
The choice by U.K. Chancellor of the Exchequer George Osborne was bold because Carney is not British, although his wife is a dual-citizen of Canada and the United Kingdom. His term at the head of the Bank of Canada was due to end in 2015, and so the move is surprising for many Canadians.
Carney was born in 1965 in Canada’s Northwest Territories. He was raised in Edmonton, Alberta and attended Harvard as an undergraduate, earning a bachelor’s degree in economics. He then went on to earn a master’s degree and a doctorate in economics at Oxford University (Nuffield College).
Before joining the Bank of Canada, Carney’s professional career took him to Goldman Sachs, and he worked for the company in London, New York, Tokyo and eventually Toronto. He then entered public service in Canada, serving as a deputy governor of the Bank of Canada and as Senior Associate Deputy Minister of Finance before his appointment as the Bank’s Governor in 2008.
Carney has been widely praised for his work as Canada’s central banker, which came at the outset of the global financial crisis. The Canadian economy face severe cross pressures from booming commodity prices and busting demand in Canada’s major export market, the United States. Alberta’s energy exports helped boost Canada’s dollar to parity with the U.S. dollar in 2008 and again in 2011, squeezing Canada’s manufacturing firms based in Ontario and Quebec. Carney kept the Canadian dollar stable, offering predictability for these firms that helped them to adjust, invest and remain competitive.
Britain’s economy lacks the commodity wealth that Canada enjoys, but must face weakness in its major export markets, the European Union and the United States. Carney, a critic of banks “too big to fail” with an insider’s knowledge of financial markets will face London’s City, a much bigger and more daring financial sector than Canada’s. His experience, disposition, and skill are well-matched to these challenges.
Even though Britain remains outside the Eurozone, European central bankers may also benefit from Carney’s experience as they attempt to stabilize their currency and the debts of Greece, Spain, Italy, Portugal and perhaps even of France. They may also turn to Carney as a U.K.-outsider who is neither a Eurosceptic nor a Europhile to talk sense to British politicians about their interdependence with the European economy. As a northern Canadian used to the neuroses of his southern Canadian fellow citizens when it comes to the United States, Carney knows all the dance steps in the love-hate tango between a smaller economy and its larger partner whose dysfunctional politics are cause for contempt.
Canada will miss Carney. He is relatively young, and there had been some speculation that he might have a future in politics — perhaps as a future leader of Canada’s currently struggling Liberal Party. If after his term at the Bank of England he still has a taste for a challenge, this one may be available.
Christopher Sands is a Senior Fellow at Hudson Institute.
This article was published by Huffington Post (Canada) and reprinted with permission.