Bank of Canada Governor Mark Carney is expected to be tapped as early as Friday to lead the Financial Stability Board, putting him in the top job at the global institution set to lead an overhaul of the international banking industry.
The announcement will likely be made at the end of the two-day Group of 20 summit in Cannes, France, which starts Thursday, according to a person familiar with the process, possibly in the communiqué that leaders including Prime Minister Stephen Harper will issue to outline their plans for keeping the global recovery on track. Mr. Carney, 46, has long been considered the top candidate for the post.
The FSB is an international body tasked with co-ordinating global efforts to set regulations aimed at preventing future financial meltdowns. Based in Basel, Switzerland, the FSB works with central banks and regulators from more than 20 of the world’s leading economies, and is poised to act as more of a policeman to make sure governments implement the reforms as promised, Mr. Carney has said in recent media appearances.
Some analysts say they expect that the G20 will give the FSB, which currently has no real authority to enforce its will, more clout and possibly its own budget so it can properly monitor financial reforms.
No Canadian has ever held the top job at an institution with such global reach. The FSB has the potential to grow into something on par with the other pillars of post-Second World War finance – the International Monetary Fund, the World Bank and the World Trade Organization, and as chairman Mr. Carney would attend all future G20 leaders’ summits. Since the FSB chairmanship is a part-time job, he would keep his job at the Bank of Canada.
At the moment, the chairman’s position – left open on Nov. 1 when Mario Draghi left to become president of the European Central Bank – is a job that relies heavily on persuasion and influence to effect change, which is why many say Mr. Carney is so well-suited for it. The former Goldman Sachs Group Inc. investment banker holds a doctorate in economics from Oxford and has worked in every major financial capital, giving him a combination of Wall Street credibility and intellectual heft that is rare among central bankers.
That mix of theory and practice has earned Mr. Carney respect among the bankers whose behaviour policy makers now seek to rein in, but his growing influence has also made him a target. For instance, Jamie Dimon, the powerful chief executive officer of JPMorgan Chase and Co., launched a tirade against Mr. Carney during a private meeting in Washington in September with several titans of global finance that the central banker had been invited to attend.
Mr. Dimon was upset about a number of reforms that Mr. Carney has championed – namely, the idea of placing stringent capital requirements on banks that are so big their failure could cripple the world financial system. Such rules, the banker argued, discriminate against huge U.S. banks such as JPMorgan and would harm the economic recovery by leaving them less money to lend.
Generally, the financial industry has lobbied fiercely against reforms that aim to force them to hold more capital and more liquid assets. Mr. Carney, however, has demonstrated a willingness to face down the most powerful figures in the industry where he spent much of his adult life.
Philipp Hildebrand, head of Switzerland’s central bank and an old friend of Mr. Carney from their days at Oxford University, has been the only other declared candidate for the FSB position but was not seen as the front-runner.