Bank of Canada May Choose Internal Candidate as Deputy

The Bank of Canada may look internally to fill a vacancy on its rate-setting panel while the government does a broader search to replace departing Governor Mark Carney, former employees say.

The deputy governor position left vacant by Jean Boivin’s departure in October could be filled by Carney advisers Lawrence Schembri or David Wolf, or by Sharon Kozicki who leads the Canadian Economic Analysis branch, said Charles St-Arnaud, Canadian economist and foreign exchange strategist at Nomura Securities International.

The internal candidates “have a good reputation as economists; they are relatively well known,” St-Arnaud, who has worked at Canada’s finance department and central bank, said by telephone from New York.

Deputies on the six-member Governing Council that sets the policy interest rate are chosen by the bank’s board of outside directors. The job posting gave a Jan. 5 deadline for applications and said the winner should have management experience and “superior analytical and communications skills,” including competence in English and French, Canada’s official languages.

Boivin left the bank in October to become associate deputy minister at the finance department. Carney said in November he would leave his job June 1 to lead the Bank of England a month later, a surprise announcement that came more than two years before his term ended.

Broad Pool

At the same time the outside directors are selecting a new deputy, they are also working with the government on the process to replace Carney, a choice that must be ratified by the federal cabinet. The directors and government are looking at a broad pool of candidates beyond internal choices such as senior deputy Tiff Macklem, according to a person with knowledge of the process.

Kozicki and Donald Coletti, chief of international analysis, would be good candidates for the deputy position, according to David Madani, an economist at Capital Economics in Toronto and former central bank researcher.

“They both have more than enough current analysis experience and academic skill, and would do well in this higher-profile deputy position,” Madani said.

Bank of Canada spokeswoman Dale Alexander said “the process is ongoing” to find a new deputy, and declined a Bloomberg request to speak to possible candidates.

The history of finding deputies from inside the bank is mixed. Current members Agathe Cote and John Murray were promoted from within, while Timothy Lane was named deputy governor six months after coming from the International Monetary Fund.

Boivin and Wolf were both named advisers to the central bank in April 2009, with Boivin arriving as an economist from the HEC Montreal school while Wolf was chief strategist at Merrill Lynch & Co. Canada.

“The pool of candidates for deputy is much wider than for the governor,” St-Arnaud said. “What they learned from the financial crisis is they need to have some people on the board who have experience with financial markets.”

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