Mark Carney, the departing Governor of the Bank of Canada, has successfully steered Canadian monetary policy through the financial crisis and the recovery. He is eminently equipped to do likewise in Britain – in a larger, more troubled economy that has only just emerged from its “double-dip” recession.
In Canada, Mr. Carney has been an exceptionally articulate public figure, outspoken on such sensitive topics as household debt and the level of corporate capital investment, while deftly managing not to trespass on the federal government’s policy-making prerogatives.
He adhered faithfully to the inflation-targeting policy he inherited, and wisely refrained from applying it mechanically in obedience to any rigid formula. Consequently, the central bank’s flexibility helped to fend off the danger of a double-dip in Canada.
Internationally, he has shown his skill and firmness as chair of the Financial Stability Board, notably in standing up to a face-to-face diatribe from Jamie Dimon, the CEO of JPMorgan Chase & Co.
The British government’s choice of Mr. Carney was well received even by the Opposition. Ed Balls, the shadow chancellor of the exchequer – in Canadian English, the Labour Party’s “finance critic” – praised his appointment.
A comparative outsider was welcome. The internal candidates at the Old Lady of Threadneedle Street had their strengths, but they had not clearly discerned the all-too-adventurous heaping up of risk in the British economy before the crisis of 2007-2008.
Mr. Carney’s job in London will be larger than it has been in Ottawa. He will not only be the head of the central bank, but also the equivalent of the head of Canada’s Office of the Superintendent of Financial Institutions. In other words, he will not only be his current self, but also Britain’s Julie Dickson.
Central bankers tend to be experts in their country’s large-scale economic structure. But Mr. Carney’s past experience in the detailed workings of the financial markets will serve him well in Britain; at the Bank of Canada, he has shown himself effective in macroeconomic policy, too.
Moreover, there is nothing so very strange in the choice of the new governor of the Bank of England; Canadians are not truly foreigners in Britain.