Mark Carney is leaving the Bank of Canada with a groomed successor in place, a slate of worthy outside candidates and a long list of thorny problems for whoever takes the job.
Senior deputy governor Tiff Macklem, the current No. 2 at the Bank of Canada, is the obvious choice to fill the large shoes of the savvy and charismatic Mr. Carney.
But the names of several outsiders are also being bandied about as Finance Minister Jim Flaherty promised Monday to launch a full search for the best possible successor over the next seven months.
Whoever gets the job inherits an economy that has shifted rapidly to slower growth.
A correction is under way in the housing market, household debt is at record levels, and businesses and consumers alike are feeling the strains of the global slowdown.
Unemployment stands at 7.4 per cent and the jobless rate among young people is just about double that, while inflation is tame.
Fresh evidence of the slowing recovery will come Friday, when most economists expect third-quarter growth to come in at less than an annualized 1 per cent.
"There are certainly growing risks in the Canadian economy," said Sébastien Lavoie, Montreal-based assistant chief economist at Laurentian Bank of Canada. Mr. Carney is leaving at a time when "household debt is crippling, there's tightening on the fiscal front and the tailwinds of the Canadian economy are starting to evaporate."
Among the notable outsiders with suitable résumés to replace Mr. Carney are Bank of Montreal vice-chairman Kevin Lynch, former top Finance Department official Don Drummond, Export Development Canada chief executive officer Stephen Poloz and Julie Dickson, head of the Office of the Superintendent of Financial Institutions. All four have spent stints at the Finance Department, the Bank of Canada or both.
Besides Mr. Macklem, there are several other credible candidates within the central bank, including deputy governors Timothy Lane, who came to the Bank of Canada after a career at the IMF, John Murray and Agathe Côté. A long shot would be Jean Boivin, who is in his 40s and recently moved to the Finance Department from the Bank of Canada, where he'll take on the G7 sherpa job once held by Mr. Macklem.
Mr. Macklem, 51, would be the choice of continuity at a time when both the Canadian and global economies are facing significant stresses. He's spent his career at the central bank and the Finance Department, and could seamlessly step into a job he already knows better than anyone else.
"There is a pretty deep bench at the Bank of Canada, so I don't think we'll feel that much ...," agreed National Bank of Canada CEO Louis Vachon. "[Mr. Carney has] done a good job of bringing in more talent."
What Mr. Macklem lacks is Mr. Carney's private sector banking experience, and his oversized public persona.
Mr. Carney won plenty of plaudits for the stability that Canada experienced through the financial crisis. His transparency and steady hand through the recession was widely seen as bolstering confidence and helping Canada weather the storm better than other countries. He has been named Canadian of the Year by the Canadian Club of Toronto and this fall, business publication Euromoney named him as central bank governor of the year.
"In Mark we had a governor who was outstanding in virtually every measure, and it's disappointing to the country to lose someone of that quality and that skill," said Royal Bank of Canada CEO Gordon Nixon. "But given the challenges in the U.K. and the challenges in Europe, and the role that he's going to play with the Financial Stability Board, he's obviously going to be equally or even more influential."
His departure comes amid growing risks – and a marked slowdown – in the Canadian economy. Years of low borrowing costs and a spending boom have sent consumer debt levels to record highs and house prices soaring – risks Mr. Carney has often highlighted.
Some observers, however, such as Philip Cross, research co-ordinator at the Macdonald-Laurier Institute, believe Mr. Carney should have raised interest rates by now. He has signalled the central bank's intention to do just that, but such a move is seen to be far off.
"Not enough attention has been paid to the dangers of excessively low rates for a long period of time," Mr. Cross said, adding that low borrowing costs have spurred individuals and provincial governments to act "irresponsibly," all issues for the next governor.
If the Bank of England can hire a Canadian, why couldn't the Bank of Canada hire an American, wondered William Robson, president of the C.D. Howe Institute in Toronto. The U.S. Federal Reserve, he said, is "stuffed with fine people."
One of the lessons of the financial crisis is that private sector banking experience matters, pointed out former deputy finance minister Scott Clark. "Central banking has changed," he said.