The Bank of England's incoming Governor Mark Carney marks a break from the norm - even in his hiring.
Until summer, Canada’s chief central banker Mark Carney was widely tipped as the only outsider who could challenge for the Bank of England’s top job.
While the Bank’s deputy governor Paul Tucker was the leading contender, Carney, also chairman of global regulator the Financial Stability Board (FSB), was seen as the elusive prize the best central banker of his generation. The only obstacle seemed to be that he was Canadian.
Hopes were dashed on August 9 when, quizzed as to whether the Bank’s top job was a “no or never” prospect for him following rumours about his candidacy, Carney coolly replied “both.” At a stroke, he appeared to have ruled himself out despite first been named in newspaper reports in April and Tucker became the outright favourite.
Behind the scenes, though, moves were afoot to anoint Carney. The Chancellor had first approached him in February, when Carney had indicated his willingness. But, as Governor of the Bank of Canada, his application had to remain a closely guarded secret, since any leaks could potentially jeopardise Canada’s financial stability.
Discussions continued throughout summer until July, when he decided against the job. Treasury insiders were said to be “depressed” by the news, but they did not give up. In October, the Chancellor re-established contact and made a couple of concessions.
The first was that the eight-year term would be reduced to just five years and the second was a change to the application process. To accommodate Carney, the Chancellor agreed to carve out an exemption for serving central bank governors. They would not have to apply for the job until interview so that, until then, they could honestly deny it.
Carney was interviewed just nine days ago, on November (Xetra: A0Z24E - news) 18 in London, by the same panel as his rivals the Chancellor, chairman of the Bank’s Court of Directors Sir David Lees, and the Treasury’s three most senior officials, Sir Nick Macpherson, Tom Scholar, and John Kingman.
The grilling would see the 47-year-old live up to his name, said to derive from the Gaelic cearnach , or “victorious”, aided by a stellar CV. Though seven years younger than Tucker, Carney is technically his superior at the FSB, part of the Bank for International Settlements.
Carney, a Goldman Sachs (NYSE: GS - news) veteran who has also served in the Canadian finance ministry, had two more key advantages over Tucker: he had better management skills, and could not be charged with the accusation that the Bank had failed to spot the financial crisis.
In fact, Canada had weathered the crisis better than most, by ensuring its banks were properly reinforced before the crisis and flooding them with emergency liquidity during it. The banks avoided a state bail-out and the economy rebounded strongly from the global recession.
Carney’s appointment, though, did make the Government’s much-vaunted “open application” arrangement appear to be little more than a charade with the other candidates just cover for the pre-selected Carney.
From very early on, it was clear that there would be cross-party support for the Canadian. Former Chancellor Alistair Darling told this paper in June: “It would be a huge mistake not to look for international candidates based outside the UK... Canadians are the only ones to say they haven’t had a crisis.”
His lack of citizenship was the one obstacle he faced, yet ultimately he was too good a candidate . Likewise, shock factor aside, the reaction from the City was yesterday broadly positive although it must now ready from a very different central banker to Sir Mervyn.
Despite 13 years with Goldman Sachs, Carney has cultivated an image back home as an unlikely everyman, speaking warmly of weekends spent shuttling his four young daughters to choir and hockey. Earlier this year he gave an interview at an Ottawa burger joint after rejecting via a spokesman - a sushi bar meeting as “pretentious”.
The reality is, of course, that his trajectory has long been taking him out of the ordinary. Born in Fort Smith in Canada’s Northwest Territories to parents who worked in education, he studied economics at Harvard, after which his college debts led him to a career in finance rather than his plans for further academica.
At Goldman Sachs, he did stints in the London and Tokyo offices, before the ivory towers lured him back to complete a PhD at Oxford, where he met his British wife Diana Fox.
Carney would return to Goldman, before eventually transferring back to Canada. There, he moved into public service in 2003, after he spotted an ad for a deputy governor’s position at its central bank.
His colleagues gawped at him ditching a multi-million-dollar salary for secondments to the finance ministry, but five years later, Carney succeeded David Dodge as central bank governor.
As well as increasing the visibility of the role back home (glued to his Blackberry, he is known to personally reply to emails from Canadians) Carney has been described as perhaps the only central banker in the world who appears to be having fun.
It remains to be seen if London will keep the smile on his face.