The New Governor From Canada

28 11 2012

Canada’s Mark Carney has had a long and successful career in global banking, finance and regulation. Yet prior to George Osborne’s announcement – just two days ago on 26 November 2012 – that Carney would replace Mervyn King (upon his retirement on 30 June 2013), the Canadian who has become the first foreigner to rise to the position of the Governor of the Bank of England was virtually unknown to the Brits. But Carney, who relishes a challenge, has had a very distinguished career and is currently the Governor of the Bank of Canada and is credited with guarding the Canadian economy against the worst of the global financial crisis. And, since last year, the celebrated regulator with a Goldman Sachs’ background, has also served as the head of the Financial Stability Board: a role which requires his oversight in respect of the regulatory agenda of the Group of 20 leading industrialised and emerging economies.

Here are some of the thoughts that Carney has shared with the media:

  • Global systemically important banks have been identified and will be subject to higher capital requirements and mandatory recovery and resolution plans. This framework is also being extended to other systemic financial firms.
  • One of the things we’re doing as international regulators, the FSB, is not just designing the rules, but we’re auditing the countries from the UK to Canada to China to see whether they are implementing these new rules … And if they don’t, then we’re going straight to the top, we’re going to the leaders of the G20 and we’re going to the media and the general public and we’re letting people know who’s on track and who’s lagging behind.
  • Global liquidity is the Keyser Söze of international finance [it has] no agreed definition and, as a consequence, there has been no coherent policy approach to tame its more violent tendencies.
  • I am proud of the [Canadian Central] Bank’s contribution to the resilience of the Canadian economy throughout an unprecedented period of global turmoil … The Bank is helping to lead the reform of the global financial system. It is introducing the most sophisticated currency in the world. And as the Government of Canada’s fiscal agent, it is providing funds management and banking services with the highest reliability and resiliency.
  • Since the end of 2007, the major Canadian banks have increased their common equity capital by 70%, or $67bn. All major Canadian banks are expected to meet the stringent 2019 Basel III requirements by next January.
  • [London is] not shot, but it’s taken some hits, without question. [The UK authorities are] already at the forefront of implementing a new set of financial regulations – they helped to design many of these and helped put many of these in place.
  • All institutions have had to dramatically tighten their awareness of what’s happening in the institutions. They’re complex banks and deal in a range of countries and range of types of transactions – and the senior executives need to be on top of all of that. And if they can’t be on top of all that, then they need to shed businesses and activities.
  • Central banks cannot solve this crisis. Central banks have to first deliver price stability. It’s in no-one’s interests to have deflation or runaway inflation.
  • [The Governorship of the Bank of England is] an extremely important post, I’m very focused on my post at the Bank of Canada and the Financial Stability Board and I look forward to working with the next Governor of the Bank of England. But until the end of June, I very much look forward to working with Sir Mervyn.

Carney’s recruitment for the job to run the Old Lady of Threadneedle Street might have come as a surprise to the City, but his reputation for robustness in approaching central banking and financial regulation is such that all members of Parliament have applauded George Osborne’s decision to bring him into the demanding job of setting interest rates and monetary policy.

Great hopes are placed in Carney and his arrival in London is expected to avert the terrible financial scandals which we have witnessed over the last few years. Sir Mervyn himself has congratulated the Canadian for taking up the job and we all hope that he can sort out the mess that the British economy is presently embroiled in. 


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28 11 2012
mkp

Quotations adapted from efinancialnews.

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