Carney Says Canadian Crisis Policy Lessons May Not Apply to U.K.

Bank of Canada Governor Mark Carney comments on lessons learned in Canada and their applicability when he takes over the Bank of England in July.

“My comments about the Bank of England are best first delivered to the Treasury Select Committee, given their role, and we are working with the committee right now to find a date in the New Year that works for both of us,” Carney said at a press conference after a speech today in Toronto.

“There are experiences of crisis management that we had here in Canada, and much is made in Canada that we didn’t have bank failures and we didn’t have other issues.”

“In part we didn’t have those because we made tough decisions in a timely fashion, I feel we were transparent, up front about the scale of issues,” including a frozen market in asset-backed commercial paper.

“You have to level with people on the scale of problems; it does no good to try to spin your way out of a crisis.”

Canada had strong coordination “amongst the major authorities.”

“The broader point I would say on monetary policy and financial stability policy writ large, I know one of the strengths of the Bank of Canada is the breadth and depth of talent in the institution and as a Governor the importance of listening to diverse points of view.”

Carney also referred back to his speech about how central banks signal their intentions on interest rates and the Bank of Canada’s 2 percent inflation target, saying it has “suitability for these times, for both normal times and times of crisis.

‘‘But in order to get the most benefit from that framework, transparency, communications is absolutely crucial, and there are ways to use communication to potentially amplify that power in extraordinary circumstances, which may be appropriate in some jurisdictions, not appropriate in other jurisdictions. Those are general lessons, which aren’t necessarily directly applicable to the Bank of England.’’

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