We went big on Mark Carney on the weekend – too big, according to some on the comment board. (“Enough, already!” is a polite version of a repeated refrain.)
Ah, but we could have gone so much bigger! Left underfoot here on the cutting room floor are all kinds of insight into what sets Mr. Carney apart, from people who were in a position to know.
The Bank of Canada later Tuesday morning will leave its benchmark interest rate unchanged at 1 per cent for a 27th consecutive month. It will do so in part because its economic models will tell policy makers that there is little reason to worry about an outburst of inflation. It also will do so on the basis of the on-the-ground intelligence members of the governing council have been able to gather, especially its leader, Mr. Carney.
“He was able to pick up the phone and talk to all kinds of people and quickly get an understanding of what was going on,” a senior finance official told the Globe’s Sean Silcoff last week, reflecting on Mr. Carney’s performance at the onset of the credit crisis in the summer of 2007. “He was a player. People would call him because they knew him.”
People knew Mr. Carney because he makes a point of getting to know them. He is a relentless networker, and he taps those networks for information.
Andrew Spence, a managing director at Ontario Municipal Employees Retirement System, was finishing a one-year stint as a visiting adviser at the Bank of Canada in 2003 when Mr. Carney arrived as a deputy governor. The two stayed in touch, but it was Mr. Carney who initiated contact. “He reaches out to any number of people,” Mr. Spence told me. “He wants information, views, context.”
Mr. Carney is the only Bank of Canada governor that has addressed organized labour. Ken Lewenza, head of the Canadian Auto Workers union, told The Globe’s Greg Keenan that he was surprised at how quickly Mr. Carney accepted the invitation. “Within a couple of days of the invitation he said, `I’d be more than glad to speak to the convention,’” Mr. Lewenza said last week. Mr. Carney also met privately with union leaders over lunch. “He was incredibly down to earth,” said Mr. Lewenza, who felt comfortable enough after the encounter to send union cards to Mr. Carney’s four school-aged daughters.
David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, described one of his experiences with an information-hungry Mr. Carney in Commentary last week . Mr. Carney’s network expanded beyond financial markets while he served as Canada’s G7 and G20 deputy. Kevin Lynch , the former Bank of Canada economist who was clerk of the Privy Council during the financial crisis, said Mr. Carney’s contact list was one of the reasons Canada weathered the Great Recession better than most.
“During a crisis, it’s actually having informal networks and being able to get the best possible intelligence, because things are changing very quickly,” Mr. Lynch, who retired from government in 2009 and is now a vice-chairman at the Bank of Montreal, said in an interview with Mr. Silcoff last week. “We weren’t behind the 8-ball on a lot of stuff. We were moving in the vanguard. Mark was ahead of many other central banks in both understanding what the underlying forces were and actually moving ahead with suggested changes to deal with them.”
Back in 2007, when David Dodge announced his intention to retire as Bank of Canada governor, Paul Jenkins was the early favourite to replace him, mostly because he was the heir apparent as the central bank’s No. 2.
Now, the current senior deputy governor, Tiff Macklem, is the favourite to replace Mr. Carney after he leaves in June to run the Bank of England. But Mr. Macklem’s status as front runner isn’t because he’s the top deputy; it’s because he replaced Mr. Carney as Finance’s G7 and G20 deputy. Some experience outside the walls of the Bank of Canada, getting to know a broader group of people and seeing the world from a different angle, is now a prerequisite for running a major central bank. It’s worth noting that Jean Boivin , an up-and-comer at the Bank of Canada, was named G7 and G20 deputy when the post opened up earlier this year.
Sure, previous central bank governors, along with other senior economic officials in Ottawa, had a network of sources. But not like Mr. Carney. As so many have noted, it’s too soon to write the final chapter on the central bank governor’s legacy in Ottawa. The Bank of Canada may or may not have sown the seeds for the next financial crisis by creating a house-price bubble on Mr. Carney’s watch.
But what can be said at this moment is Mr. Carney showed Ottawa what it takes to excel in the global economy. The Bank of Canada is “quite different now than when I first encountered it,” said Mr. Spence, a former British treasury official who has been working in Canada for a couple of decades. “There is a better appreciation for diverse points of view.”