Pedestrians pass The Bank of England in the City of London.© Olivia Harris / Reuters/Reuters
Less than two weeks ago, the editorial board of the Financial Times made a bold statement.
The paper typically doesn't endorse candidates for the Bank of England chair, but it took the time to weigh in on the horse race by endorsing Paul Tucker, the central bank's deputy governor in charge of financial stability.
They also added a telling line, commenting on the speculation that Mark Carney was, or had been, in the running for the role. "A foreigner would have been a controversial and difficult choice."
And yet, here's Mark Carney, being named governor of the Bank of England.
There are even more reasons to be shocked. Mr. Carney repeatedly and unequivocally denied his interest in the position. The Telegraph wrote a story in August, not even half a year ago, noting that "When asked whether it was a 'no or never' situation [to run the bank], he replied: 'both.'"
So what changed? More colour on that will surely come. People are simply trying to digest the news. But Mr. Carney himself noted that his decision was made incredibly quickly. "Discussions really only intensified in the last two weeks," he said at a press conference seated beside Finance Minister Jim Flaherty.
Asked if he was "trading up," or accepting a position with more prestige, Mr. Carney more or less dodged the question, but he kept saying that this is a very challenging time for the British economy and added that he weighed staying "against the needs and challenges of the U.K."
Major changes are afoot across the pond. Of course, the country's economy is struggling, but next July, the Financial Services Authority – the securities regulator – will also be split in two and the Bank of England will take on many of its task.
So not only does Mr. Carney get control of a bigger central bank, but a central bank that supervises more things. He also noted that he will stay on as chair for Financial Stability Board, set up by the G20 group of countries.
With Mr. Carney in, the question is, what happened to Mr. Tucker? In the FT's editorial, he was referred to as the "safest bet," mainly because of his decades of experience at the bank. But keep in mind that Mr. Tucker was ensnared in the Libor scandal this summer after it was revealed that he exchanged e-mails with Barclays then-CEO Bob Diamond. The e-mails never indicated that Mr. Tucker advised the bank CEO to fix any rates, but they raised questions.
Mr. Carney, on the other hand, comes in without any bad blood between him and England's political parties, and he's widely viewed as being a smart central banker.
On the last note, Canada's finance minister admitted that Mr. Carney's "loss will be felt."
Tim Kiladze