The Chancellor shocked the City when he revealed the next Governor of the Bank of England. The Sunday Telegraph reveals what drives Mark Carney.
"His thesis was distinctive in that it was much broader than a typical thesis," recalls Meg Meyer, a professor at Nuffield College, who was Carney's supervisor. "Each of the chapters explored the subject from a completely different angle."
The thesis, which still sits on Meyer's shelf, examined the ways in which domestic competition shapes the overall competitiveness of a national economy. Meyer explains that the thesis was theoretical and did not focus on a particular country.
Almost 20 years after finishing his doctorate, Carney will return to the UK next summer to a job that is far from theoretical. The focus of the next Bank of England Governor, over the five years he will retain the position as one of the most powerful unelected officials in the country, will be to map Britain's path to a stronger and sustained economic recovery.
The euphoria that followed Carney's surprise appointment last week also suggests that a weary Britain hopes the Canadian will have new ideas about the right course to growth.
That optimism partly reflected the meteoric rise of a man who began life in Fort Smith, a northern Canadian town where the surrounding bison comfortably outnumber the 2,400 locals. Since he headed south, Harvard, US investment bank Goldman Sachs, Oxford University, Canada's finance ministry and the Bank of Canada have made it on to the 47-year-old's CV.
The hopes are also a measure of the UK's envious looks towards Canada which, after escaping with a much shallower recession than Britain in the immediate wake of the financial crisis, has enjoyed a more robust recovery.
Seven days on from George Osborne's shock announcement, the euphoria has inevitably ebbed. It is partly a recognition that, for all Carney's talents, he was dealt a relatively good hand when he took over his country's central bank in 2008, thanks to Canada's strong financial regulation and its natural resources. Indeed, the next six months will see Carney continue his battle to slow the accumulation of household debt in Canada.
There is also a sober acknowledgement that the marathon runner has accepted a particularly gruelling task in Britain. He will inherit an institution whose remit has been extended from controlling inflation to regulating the City; an economy that has done little more than stagnate since the crisis and a European economic drama that may well still be unresolved by the time he is on the plane back to Canada in 2018.
"London, with New York (Frankfurt: A0DKRK - news) , is the biggest financial centre in the world," says Bill White, the former chief economist at the Bank for International Settlements and a fellow Canadian who knows Carney. "Having the responsibility to make sure all that works, is very different from running a central bank in Canada. It is a substantial step up."
As the countdown to Carney's arrival begins, the question being asked in the City of London (LSE: CIN.L - news) and by businesses and households across the UK is: what will he do when he gets here? Carney is a central banker who has been forged by the crisis and, in three key respects, this will shape how he sets about plotting a path forward.
Perhaps most importantly it will determine how he handles Britain's banks, which the Bank now has responsibility for regulating individually as well as for their overall financial stability.
Carney's 13 years at Goldman Sachs equipped him with an understanding of the complex links between the financial sectors and the rest of the economy, broadly missed by a generation of central bankers pre-meltdown.
On Toronto's Bay Street, Canada's Wall Street, he is given most credit for defusing a crisis in the country's C$30bn (£19bn) asset-backed commercial paper in 2007 that threatened bank lending.
"He was very persuasive in helping convince the banks that they should come to the table and negotiate," says Purdy Crawford, a lawyer who represented investors who had bought the paper and worked with Carney. "It was Mark who convinced the finance ministry that they had to do something."
Such credit will be much harder to come by in Britain, where the debate about bankers' pay and the role banks should play in the wider economy is far more politically explosive than in Canada, where taxpayer bail-outs were avoided. Carney may find that his background at Goldman Sachs proves far more controversial in London than in Ottawa.
On remuneration, Carney is relatively hawkish, saying in a speech in 2009: "We all agree that bonuses should be tied to long-term performance. The current windfall sits uneasily with that principle."
More critically, the Canadian will have to navigate a tightrope between regulating a City hit by repeated scandals this year and en-suring he does not choke off a central part of the UK economy.
"The UK is not a commodity-driven economy like Canada, it's got a much larger banking sector. He will have to learn not just to accommodate it, but grow it. It's big business in Britain," says White.
Although the Bank of Canada does not regulate the country's banks, financial regulation is a central interest of Carney's. It is one he has pursued in the past year as chairman of the Financial Stability Board, the body for enforcing the global implementation of the new Basel III capital requirements and greater co-operation on financial regulation.
In May this year, Carney said: "This is strong evidence that having these rules of the road in place are essential to making sure that taxpayers don't get left holding the bag."
Carney has been a vocal critic of bankers who have resisted new regulations, prompting a clash with JP Morgan chief executive Jamie Dimon at a Washington meeting last year.
There is little doubt that the Canadian is committed to creating regulations that avoid future taxpayer bail-outs and finding ways for large financial institutions to fail without taking economies down. Carney's favoured method appears to be higher capital requirements and much closer supervision of institutions, rather than breaking up the biggest institutions as Sir Mervyn King advocates.
Although Carney's speeches argue for the need for banks to be far better capitalised than before the crisis, he also acknowledges the role banks have to play in a recovery. "The point is not to pile up capital and other regulatory capital requirements so high that banks are never heard from again as either a source or risk or credit to the real economy," he told the Economic Club of Canada in Montreal last month.
The tension between making the financial system safer while igniting a recovery is one that Carney will feel far more acutely in Britain than he has across the Atlantic (Frankfurt: 640218.F - news) . Analysts at UBS (NYSEArca: DJCI - news) do not expect the new governor to push British banks to hold far more capital than is required by the new Basel III regulations.
Last week, the Bank of England warned that UK banks may need to raise another £60bn to cover the cost of new regulatory risk standards as well as the expense of mis-selling scandals. While Carney grasps the links between the financial sector and the wider economy, the City will have to wait until July for a clearer idea of what he will ask of the country's lenders.
In his new role, Carney will chair the all-powerful Financial Policy Committee (FPC).
Whatever conclusion Carney does reach after a few months inside his office on London's Threadneedle Street, it is likely that he will express it forcefully. Like Ben Bernanke at the US Federal Reserve, the financial crisis has taught the former Goldman banker that communication can be a vital policy tool in an era in which interest rates are already at record low levels and other tools of control are largely untested.
In 2009, for example, he was the first central banker to publicly commit to keeping rates at a low levels for an extended period in an effort to stimulate investment and demand.
"He spoke directly to Canadians," says Louis Gagnon, a former executive at Royal Bank of Canada and now a professor of finance at Queen's University in Kingston, Ontario. "He has been by far the most visible governor." Carney has given twice the number of speeches Sir Mervyn has over the past four years.
The Canadian's forceful communication of policy has been made easier because the Bank of Canada's five-strong governing council reaches its decision on interest rates by consensus, leaving investors in the dark about tensions and splits among policymakers. It is not a luxury Carney will have at the Bank of England, where the votes of all nine rate-setters are published each month and the external members of the Bank's top committee rotate every three years.
One of Carney's greatest challenges, say economists, is to decide how to run the 318-year-old institution, whose reach over Britain's economic life has been vastly extended by the Coalition. "In many ways, he will have to play the role of chairman," says Amit Kara, an economist at UBS.
With Osborne having taken some political risk by turning to a foreigner to run the Bank, Carney appears to have an invitation to shake up the way it is run. A recent report commissioned by the Bank's governing body lambasted it for having too-hierarchical a structure.
It is also unclear how long Paul Tucker, the deputy governor, wrongly widely regarded as the favourite to succeed Sir Mervyn, will stay and Charlie Bean, the other deputy, will be gone a year after Carney arrives. At the Bank's Financial Stability press conference on Thursday, Tucker was unforthcoming about his future at the Bank.
"He should bring in people from the outside," says David Blanchflower, a member of the bank's Monetary Policy Committee (MPC (KOSDAQ: 050540.KQ - news) ) between 2006 and 2009. "They need new people who will do new things."
In Ottawa, there is speculation that Carney could import people from the Bank of Canada. He has two special advisers in David Beers and Evan Siddall, while Paul Chilcott, head of financial markets, worked at the Bank of England for years.
Others believe Carney may become dissatisfied with the split whereby the MPC has strict responsibility for monetary policy and the new FPC has exclusive sway over monitoring risks to financial stability.
Last year, for example, the Bank of Canada sought powers, in exceptional circumstances, to focus monetary policy on increasing financial stability rather than controlling inflation - such as to raise or lower interest rates to tackle an imbalance that stretches across the whole economy rather than a specific sector. "He may not be too comfortable with the strict division of labour," says Simon Ward, an economist at Henderson.
Such strict divisions may also get in the way of a pragmatic approach to solving problems that, for White, comes from Carney's background both on Wall Street and in central banking. "I don't think Mark is wedded to any ideological thread of thought," argues White.
A pragmatic approach is also likely to be the one that Carney takes towards quantitative easing. Unlike the Bank of England and the Federal Reserve, the Canadian central bank has not printed money since the crisis because it has not had to. It remains unclear whether Carney will prove as powerful a proponent of the policy as Sir Mervyn.
However, there is third way in which Carney is a banker shaped by another broad lesson from the crisis: he knows Western economies will not be able to rely on domestic consumer spending to sustain growth the way they did before the crash.
Exports account for about 30pc of the Canadian economy and about 75pc of those head to the US. With US growth still spluttering, Carney has pushed for Canadian companies to take advantage of increasing demand from the rapidly growing emerging markets. "We need an aggressive, emerging-market focused trade strategy," he told the Canadian Auto Workers Union in a speech in August.
It is likely that Carney will add his voice to calls in the UK for companies to target emerging markets, such as China, India and Brazil. It is an expectation strengthened by the Canadian's outlook for Europe (Chicago Options: ^REURUSD - news) , Britain's biggest trading partner. In a speech in October in Vancouver Carney lambasted the "seemingly endless series of crisis summits" as he urged European governments to be more open to the notion that the crisis will ultimately take years to resolve.
This time last week, Carney was enjoying his final day of relative seclusion in Ottawa. With seven months until he becomes the Governor, more questions and answers will emerge about the approach this very modern central banker will take to steering the UK economy.
Meyer, said that Carney had great energy and a willingness to examine a problem from all angles. He will need both when he starts on July 1, which just so happens to be Canada Day.