March 18, 2019

Canadian Steps In to Lead Bank of England

It was Mark J. Carney, who was then the more or less anonymous head of Canada’s central bank. An increasingly influential, if not discreet, troubleshooter on global financial matters, Mr. Carney had become an active participant at Downing Street’s crisis huddles in late 2008. He argued that giant entities like Royal Bank of Scotland posed a danger not only to their home country but the financial system as a whole.

Mr. Carney’s advice was to consider the institutions those banks were borrowing from and lending to, recalled Alistair Darling, who was the British chancellor of the Exchequer, or finance minister, at the time. “It gave us a bigger picture that the supervisory authorities did not have at the time,” Mr. Darling said.

Britain would later become the first major country to inject capital directly into its ailing banks. And while full credit for the decision goes to Mr. Darling and the prime minister at the time, Gordon Brown, Mr. Carney played a crucial role.

On Monday, Mr. Carney, 48, will no longer be an adviser but the man in charge. He is to step into the Bank of England’s palatial home on Threadneedle Street to take on one of the biggest roles in the future of Britain’s economy and banking sector.

Mr. Carney, who is Canadian, is succeeding Mervyn A. King as the governor of the Bank of England and is hailed as the first non-British governor in the bank’s 319-year history. But as Mr. Carney prepares to take on his new role some question if the task at hand may be beyond him, or any central banker, for that matter.

Sluggish demand for goods from the troubled euro zone, Britain’s largest export market, is keeping many companies from investing in new machinery or hiring staff. And the austerity measures prescribed by the current chancellor, George Osborne — which are likely to continue through 2018, much longer than initially planned — have squeezed disposable income as consumer prices keep rising. At the beginning of the year, Britain barely avoided a triple-dip recession.

“We’re not exporting enough and not consuming enough, and monetary policy alone can’t fix that,” said Robert Wood, an economist at Berenberg Bank. “Mr. Carney has been built up as Superman, but clearly there’s no way he can live up to the hype,” Mr. Wood said. “He can’t single-handedly rescue the economy.”

Mr. Carney declined an interview request.

Young and dynamic — he was a goalie on Harvard University’s varsity hockey team — Mr. Carney brings with him attributes not usually found among the dowdy breed of central bankers. While Mr. King once said his ambition was for monetary policy to be boring, Mr. Carney has been overheard using phrases like “monetary activism” and “escape velocity.”

An ability to make himself seem indispensable lies at the root of Mr. Carney’s extraordinary rise, accomplished in just under 10 years, from a position as a midlevel investment banker at Goldman Sachs to the top of the Bank of England.

It was not until March 2008, when Mr. Carney became the first central banker to aggressively lower interest rates in his country, that his current reputation as the Superman of central bankers began to take form. He then pledged to keep rates low for a year — at 0.25 percent — providing some certainty to borrowers in the chaos of the financial crisis.

For Mr. Osborne, it was that combination of style and substance that made Mr. Carney “simply the best, most experienced and most qualified person in the world” to lead the Bank of England. So eager was Mr. Osborne to hire Mr. Carney, who has a doctorate from the University of Oxford, that he chased him across continents to ask him more than once and to promise by far the highest pay package of any central banker in the world — £480,000, or $730,000, in salary, plus a generous housing allowance.

Under Mr. King, the Bank of England injected money into the economy by buying £375 billion in assets, mainly government bonds. To get banks to lend again, the central bank started to offer cheap credit to banks, but that stimulus move had little result. Mr. King, arguing that more needs to be done to revive growth, has been voting for more asset purchases on the monetary policy committee but has been outvoted every month since February.

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