Big Winner: Mark Carney

‘He’s simply the best.’

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(The Canadian Press/Fred Chartrand)

Since Mark Carney became governor of the Bank of Canada in 2008, public sentiment has slowly grown from quiet respect to euphoric infatuation. Time called him “smart and sexy.” The Financial Times said he’s one of 50 who will “frame the way forward.” The Canadian Club of Toronto named him Canadian of the Year. He earned these accolades by guiding the country through the worst of the recession, building a reputation as an expert on complex financial reform, and snagging the top spot at the Financial Stability Board, an international body crafting new policies for global finance. He stood up to greedy bankers, chastised corporations for sitting on piles of cash rather than investing, cracked wise with the media, and even managed to name-drop Down With Webster, a Canadian rap-rock group of questionable talent, without damaging his cred.

To Carney’s long list of skills, good timing should be added. In July, he moves to London to head up the Bank of England. He will be leaving this country having built an impeccable reputation—although partly because he hasn’t dealt with the most difficult aspect of his job.

England is thrilled to receive him. “He is quite simply the best, most experienced, and most qualified person in the world,” George Osborne, chancellor of the exchequer, told the British House of Commons. He probably wasn’t exaggerating. Carney’s record as a central banker is so far flawless. His experience in the private sector and his role at the FSB make him uniquely qualified to handle the Bank of England’s hugely expanded mandate. Not only does the bank set monetary policy, it will assume regulatory control of the financial sector. Since Carney is the living embodiment of prudent Canadian monetary, fiscal and regulatory policy, his very presence should help restore confidence in a bruised and scandal-plagued U.K. regime.

The job in Canada is far from finished, however. Carney was quick and decisive in slashing rates during the crisis, more so than other central bankers, but the sustained period of low rates has led to a record amount of household debt and other problems. Rates have to go up eventually. The longer the Bank of Canada sits at 1%, the more painful the adjustment will be. If the central bank moves too soon, the economy slips back into a recession. Carney, who’s leaving roughly two years before his term officially expires, won’t be the one making that tough call. He won’t even be in Canada to face any fallout.

Still, he signed himself up for a vastly more challenging task in the U.K., one that could define his career. “He could come out just smelling of roses,” says Laurence Booth, a finance professor at the Rotman School of Management. “This is the most demanding financial job in the world.” He’ll have to think creatively as a central banker, since traditional monetary policy has failed to juice the moribund economy. His options are limited. “He can maybe open the bank up to using different policy instruments, but I don’t think that will have a profound impact,” says Richard Barwell, senior European economist at the Royal Bank of Scotland. “Unless he can bring a magic wand with him in his suitcase.” Maybe he can. This is Mark Carney, after all.

One comment on “Big Winner: Mark Carney

  1. Carney along with Flaherty created this horrible problem and now he is jumping ship before it sinks. Housing and personal debt in Canada are huge problems created by Flaherty’s 40 year mortgages and Carney’s holding the interest rate too low for too long. He is far from “smart and sexy” now that he is leaving, Bank VP’s are leaving, Premiers are quitting…..All because they know what they have caused for the rest of the country and don’t want to be around in the fall of 2013 to face the music…

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