Mark Carney expects his five years at the Bank of England to be a period of “almost radical transition” as he takes on the overhaul of a scandal-marred 318-year-old institution.
Mr. Carney, who shocked Canadians last month with his decision to leave the Bank of Canada to become head of the U.K. central bank, will step into his new job at a critical time. He faces a stumbling U.K. economy and will have to manage a vast internal revamp that will see the bank gain new responsibilities for policing some of the world’s largest financial institutions.
It is a job he resisted for nearly nine months, Mr. Carney revealed in an interview with The Globe and Mail during which he outlined the long courtship by high officials in the U.K. The Governor said he repeatedly turned away the approaches until George Osborne, the Chancellor of the Exchequer, made a new pitch when the two met at a G20 gathering in Mexico City the first weekend of November.
Key to the decision was Mr. Osborne’s willingness to accommodate Mr. Carney’s wish for a shorter term as governor than the usual eight years so that he can return to Canada before his family’s roots in the U.K. grow too deep, and so his four daughters can finish their education in their own country.
“It matters because of the ages of my children, and when they would finish school, and the ability to come back here,” he said. “One can play things out. If your children graduate school there, and they end up going to university there, and then one thing leads to another. That makes it easier.”
Five years appealed for professional reasons, because the term will span deep change at the Bank of England, the “decisive time” for financial reform in London, the world’s most important financial centre, and attempted revival of the British economy. Five years also closely matches Mr. Carney’s potential tenure as head of the global watchdog known as the Financial Stability Board (FSB).
Mr. Osborne also came bearing money, and lots of it. Mr. Carney will be paid £624,000 in salary and pension contributions – more than double the compensation of the incumbent governor, Sir Mervyn King.
“There’s all these major things to do and it’s a time of consequence and change,” he said. “It’s for a period of almost radical transition and then one steps back and moves back.”
The British pursuit of Mark Carney began in February – also at a G20 meeting in Mexico City, as it turns out.
Mr. Carney had scheduled what he thought was a routine meeting with Mr. Osborne. The chancellor’s idea of hiring Mr. Carney to run the Bank of England was “unexpected,” Mr. Carney said, but he “gave it some consideration.”
Still, he said no, as he did to other approaches that followed.
“Part of it was this was quite an unusual idea, and I was happy doing what I was doing,” he said. In addition, his work on the Financial Stability Board was “keeping me busy.”
In April, the Financial Times reported that the Bank of England, in search of a new leader, had cast its eye on Mr. Carney. That began months of on-and-off speculation in the media, forcing Mr. Carney to repeatedly bat away questions about whether he would go to London.
“I am quite happy in Canada. And I intended to end my term here. When I made those statements, at the time, they were accurate,” he said.
The exception came in an interview with the British Broadcasting Corp. in August, when he answered a question from an interviewer about whether his position on the Bank of England job was “no or never” and Mr. Carney replied, “both.”
“The lesson is never say never again,” he said Tuesday, jesting that he has “taken my James Bond lore to heart.”
He declined to apply when the Bank of England’s formal application deadline came in October. “I spoke directly to the chancellor and said I am not submitting an application.”
Still, the advances from Mr. Osborne had set Mr. Carney to thinking about his future. He determined that he would not seek a second seven-year term at the Bank of Canada after his current term was scheduled to end on Jan. 31, 2015.
The widespread view is that he was bored, having run the central bank through tumultuous times and now being stuck in a much quieter phase as Canada’s economy slowly recovers. He hasn’t even moved interest rates in two years.
Mr. Carney said he was also given assurances that a key Bank of England deputy would continue on while he got to know the institution. “One of the deputy governors who runs monetary policy, Charlie Bean, was staying on for a year, which was actually incredibly relevant and helpful. He’s extremely capable and makes a difference in the transition.”
Mr. Carney said that in his view, more than a decade as Bank of Canada head would be too much, leaving too deep a stamp on the organization.
“Seven years in one job is a pretty good length of time. I’m not sure 14 years in that job is the best thing for the institution.”
By November, when the Bank of England job became a possibility, Mr. Carney said Finance Minister Jim Flaherty was aware. When Mr. Carney reached the conclusion he wanted to move, the pair met in the week before the Nov. 26 announcement.
There were also conversations between the governments of Canada and the U.K. “at the highest levels,” Mr. Carney said.
His five years at the Bank of England begin on July 31. He will seek British citizenship, perhaps only as a flag of convenience to enable him to take the job. But come 2018, he expects to return.
“Our intent is to move back to Canada. I’m Canadian. My family is Canadian. It makes sense.”
Beyond that, he declined to speculate on his next job.
“Five years, depending how you view time, is an eternity or will go by like that. You can’t look beyond that at all. I don’t look beyond it. Obviously, when I became governor of the Bank of Canada, I never expected to become governor of the Bank of England. One can’t map out a career.”
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