Bank of Canada Governor Mark Carney may bring new thinking to the U.K. central bank and refresh its ability to tackle recessions and potential financial crises, said William White of the Organization for Economic Cooperation and Development.
“He has a different background” to that of current Bank of England chief Mervyn King, White, a former Bank of Canada deputy governor, said in an interview with Tom Keene on Bloomberg Television’s “Surveillance.” He has a “less academic background, to be able to throw away some of the old models and get into what some would consider to be newer thinking.”
Carney will become the first foreigner to run the 318-year-old Bank of England when he succeeds King on July 1 next year. The Canadian will take over a revamped institution that’s adding financial regulation to its powers along with monetary policy as the government seeks to strengthen the banking system against future crises.
There are a “lot of difficulties in the City, issues with good governance of banks, to say nothing of issues of financial stability,” said White, who is chairman of the OECD’s Economic and Development Review Committee. “They wanted someone with a wide range of experience who was completely clean and outside the system. That’s the kind of guy they got.”
Carney will lead both the Monetary Policy Committee at the central bank and the Financial Policy Committee, charged with using macro-prudential tools to address risks to the broader financial system.
Speaking on the same show, Stephen Roach, a professor at Yale University, said Carney is “very focused on the whole macro construct of financial stability, and the interplay between the financial stability and monetary policy.”
“This is a very important step up in the analytical firepower of central banking,” Roach said.
Carney’s surprise appointment, which won cross-party support in the U.K. Parliament yesterday after it was announced by Chancellor of the Exchequer George Osborne, was also praised by former MPC member David Blanchflower, who said he was against an insider being appointed.
“It’s a change of the guard, it’s a huge job, but I think this guy’s going to shake it up with a new broom,” Blanchflower said.