New governor vows to shake up central bank

Tim Wallace
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MARK Carney yesterday pledged to shake up weak economic forecasting, work out how to unwind quantitative easing (QE) and reorganise the Bank to make sure its vast new powers over banks can be used properly.

The Canadian governor showed some disagreement with Sir Mervyn King, arguing interest rates should be raised when policy needs to be tightened, rather than selling gilts to begin with.

And he said in any case a “credible plan is needed in advance in order to maintain confidence. The exit needs to be achieved without disrupting the gilts market.”

But before that is necessary, he also suggested the Bank should consider being more creative in the use of QE, potentially buying corporate bonds and SME loans to stimulate the economy more effectively than buying government bonds alone.

Responding to critical reviews by external City grandees, Carney argued he would strive to build consensus in the Bank, rather than ruling by diktat.

And he said the Bank needs to become more nurturing, promoting talent through the institution and creating a team culture.

“Succession planning and talent management will be paramount. The Bank will need to attract, retain and promote an assertive, engaged, accountable staff at all levels,” he said in additional written evidence to MPs.

“The Bank should develop its team culture that promotes timely, well-researched and consensus-based decisions.”

Previous reports had found a culture where staff were afraid to challenge senior managers and would self-censor to avoid damage to their careers.

And Carney argued in favour of more transparent reporting of Bank forecasts, for example including alternative inflation and growth scenarios in reports when the true economic picture is in doubt.


The 47 year-old Canadian has a predictably impressive CV, with both the academia and career sections full of accomplishments. He studied economics at Harvard before crossing the pond to gain a D.Phil at Nuffield College, Oxford. It was amidst the dreaming spires that he met Diana Fox – a fellow economist who has gained attention for her forthright views on the environment. Carney yesterday attributed his shorter-than-expected term as Bank governor – five years – to plans over his children’s education. The reasoning is less surprising when one considers that he and his wife have four daughters.

After leaving Oxford, Carney worked at Goldman Sachs for 13 years before becoming senior associate deputy minister of finance in Canada, and then governor of the Bank of Canada. Yesterday Carney insisted that he holds no political ambitions, following accusations that close links to some Canadian Liberals may hint at his next move once he leaves Threadneedle Street. A senior figure in the efforts to develop global governance of the banking sector, Carney chairs the Financial Stability Board and is on the board of the Bank of International Settlements. He starts his new job in July.