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Senior deputy governor of the Bank of Canada Carolyn Wilkins responds to a question during a news conference, on July 15, 2020 in Ottawa.Adrian Wyld/The Canadian Press

Carolyn Wilkins, the highest-ranking woman in the Bank of Canada’s history who was passed over for the top job of governor this year, has decided to leave the bank when her term as senior deputy governor ends next May.

In a news release Thursday, the central bank said Ms. Wilkins, 56, informed the board of directors that she won’t seek a second seven-year term as the bank’s number two official behind Tiff Macklem, who took over as governor from Stephen Poloz three months ago. The bank said its board will initiate the formal search process for Ms. Wilkins’s successor.

A highly respected 20-year veteran of the central bank, Ms. Wilkins was considered a heavy favourite to become governor after Mr. Poloz announced late last year that he would leave when his own term expired in June. Mr. Poloz had plucked Ms. Wilkins from the bank’s research ranks to make her his adviser when he became governor in 2013, promoted her to his senior deputy a year later, and groomed her for the top job.

But Prime Minister Justin Trudeau and then-finance minister Bill Morneau instead opted for Mr. Macklem – himself a Bank of Canada veteran and former senior deputy governor, who had left the bank six years earlier after being passed over for the governorship in favour of Mr. Poloz.

“My time at the bank has been the most fulfilling period of my career – a testament to the many dedicated and talented colleagues, both at home and abroad, that I have been fortunate to work with,” Ms. Wilkins said in a statement.

“Building and carrying out a shared vision for the bank with Governor Poloz has been a professional highlight. I’ve also enjoyed working closely again with Governor Macklem. The bank is in good hands.”

Ms. Wilkins’s decision means a further changing of the guard at the top of the Bank of Canada, at a time when the bank has embarked on an extraordinary set of actions to combat the economic and financial-market fallout from the COVID-19 crisis, and has launched a major review of its mandate in preparation for next fall’s renewal of its five-year inflation-targeting agreement with the federal government. Ms. Wilkins has played a central role both in establishing and overseeing the bank’s asset-purchase programs during the crisis, and in the mandate review.

“She will be tough to replace in more ways than one,” said Bank of Nova Scotia economist Derek Holt, who follows Bank of Canada matters closely. “One example is her devotion and strong contributions to steering much of the behind-the-scenes work, particularly with respect to implementing unprecedented stimulus [during the crisis].”

“She was also the only example of walking the walk and talking the talk on diversity and inclusion on the BoC’s Governing Council,” he added, noting that Mr. Macklem has identified diversity and inclusion as a priority for his tenure.

“Carolyn was certainly a great asset at the bank. But we need not worry about stability there,” said Queen’s University economist Don Drummond, who spent more than two decades in the senior ranks of the federal finance department. “Tiff has spent most of his adult life there. Most of the deputy governors have been there a long time, and they are strong hands.”

Formally, the search for a new senior deputy is in the hands of an independent committee of the bank’s board, although in practice, the governor provides significant input into the choice. However, final approval lies with the finance minister and prime minister.

There are several potential candidates among the bank’s current deputy governors to succeed Ms. Wilkins as senior deputy – including Tim Lane, the longest-serving deputy, and Paul Beaudry, who was mentioned frequently as a top candidate for the governor’s job during the search this year.

A couple of well-regarded names outside the bank, who were believed to have been in the running for the governor’s job, might also be strong candidates to become Mr. Macklem’s number two.

One is former deputy governor Jean Boivin, now a top executive at investment firm BlackRock Inc., who worked closely with Mr. Macklem during Mark Carney’s governorship. Another is deputy minister of finance Paul Rochon, who worked side-by-side with Mr. Macklem as senior officials at the Department of Finance from 2007 to 2010 – a period highlighted by the pressure cooker of the global financial crisis.

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