There is a well-defined process that will be used for finding a replacement for Bank of Canada Governor Mark Carney – it just isn’t overly transparent.
The Bank of Canada’s 12 independent directors are formally delegated with the task of appointing the next governor. But it isn’t their choice alone. Any pick will also have to be approved by the federal government through both the Minister of Finance and the rest of the federal cabinet.
The Bank of Canada said in its statement Monday, in announcing Mr. Carney’s appointment to head the Bank of England, that a special committee of its board will be formed “shortly” to operate as a hiring committee and will run what has been termed a “recruitment process.”
The board next meets in December, so it’s likely the hiring committee will be established at that time and quickly get up and running.
It is expected that the Bank of Canada will run help-wanted advertisements both in Canada and abroad for the post, which is considered a plum position in central banking circles.
The bank’s independent directors are almost always business executives, named by cabinet to their posts, so it’s unlikely they’d make an appointment that isn’t in tune with the government’s own wishes.
Mr. Carney and senior deputy governor Tiff Macklem also sit on the board as directors, but are not independent. The deputy minister of finance is a non-voting board member and isn’t expected to have a formal role in the hiring.
At this point, no firm date has been selected for naming the replacement, although the directors are working to a deadline. Mr. Carney will stay on until June 1 to ensure an orderly transition to the next governor.
Those watching the hiring from the business community will be noting whether the directors promote from within its ranks, or whether they name a replacement with a business community background, such as Mr. Carney, who previously was an executive with investment bank Goldman Sachs.
“It’s really whether or not that they go back to tried-and-true traditions whereby they get somebody who has gone through the ranks internally, or if they opt to elect someone that’s come from outside, i.e. the private sector,” says Ian Pollick, fixed-income strategist at RBC Dominion Securities Inc.
If the directors decide to promote from within, the obvious choice is Mr. Macklem, who has been with the bank on and off since 1984.