Canada’s cozy confines were never going to contain Mark Carney’s big ambitions forever.
The Bank of Canada Governor could have had any job he wanted in Canada. Bank CEO? Sure. Liberal Party leader? In a heartbeat. Prime Minister? One day, perhaps.
So bright is his star that the 47-year-old former college netminder might dare to dream of a hockey comeback with the Toronto Maple Leafs.
But Canada’s banking superstar wanted more.
As he prepares to take the helm of the Bank of England next July, it’s worth wondering whether Britannia can satiate Mr. Carney’s towering aspirations.
Consider this: Moving to the United Kingdom and becoming a British citizen conveniently makes Mr. Carney eligible for one of the most powerful and prestigious jobs in global finance – head of the Washington-based International Monetary Fund.
As a Canadian, this job would never be his. Under an informal backroom code, the post always goes to a European. Current IMF boss Christine Lagarde, a former French finance minister, is the 11th consecutive European to run the fund since its creation in 1945.
In spite of repeated pledges by world leaders to adopt an open recruitment process for top jobs at the IMF and the World Bank, the powers that control these institutions stubbornly hang on to plum assignments. The United States picks the president of the World Bank and staffs the No. 2 post at the IMF, while the Europeans get the IMF managing director’s job.
And that’s the way it is because the Europeans have roughly a third of the votes at the IMF. The United States has what amounts to a veto over key decisions because it controls 17 per cent of the votes at an institution that requires 85-per-cent voting consensus.
IMF managing director is every banker’s dream job (although it’s typically not staffed by a real banker). It has prestige, power and numerous perks.
Mr. Carney’s decision to take a five-year term at the Bank of England, rather than the eight-year job he was offered, suggests this won’t be his last stop. Even after a full five-year term, he’ll be in his early 50s and still in the prime of his career.
When Ms. Lagarde’s five-year term ends in 2016, Mr. Carney would be more than half-way through his own term at the Bank of England. By then, Britain’s financial and economic problems may have eased, perhaps making the British government willing to back Mr. Carney for the IMF job. Britain has never had one of its own in the top IMF post.
And given the IMF’s penchant for glacially slow reform, Mr. Carney might be seen as a suitable transition to a non-European. By then he’ll be a Canadian-British dual national – only half-European – and one of the world’s most experienced central bankers.
Like all highly successful corporate executives, Mr. Carney seems to intuitively know when to move on. He walked away from Goldman Sachs in 2003 – well before the housing collapse and global financial crisis would stain the investment bank’s stellar reputation.
After apprenticeships at the Bank of Canada and the federal Finance Department, Mr. Carney became Governor in February, 2008, just seven months before the Lehman Bros. collapse unleashed a global credit crunch.
Dark clouds were gathering as Mr. Carney took the helm of the central bank. But the country was well-positioned to weather the storm. Canadian banks were healthy and well-capitalized, thanks to their large market shares and tough regulation that discourages risky real estate lending. And Ottawa was running a budget surplus.
None of that was Mr. Carney’s doing. But he benefited from the glow that fell on Canada when the country survived the great recession better than most.
He leaves at a time when his own legacy of ultralow interest rates is an unfinished story.
If the housing market lands softly, the banks avoid bad-loan trouble and the economy recovers, Mr. Carney will be remembered as one of Canada’s best central bank governors.
If all that easy money causes lasting damage, experts may look on his legacy less charitably.
In the end, how Mr. Carney handles the challenges facing Britain’s economy will determine how bright his star will shine when the next job opportunity comes his way.