Who is Mark Carney?

The man cherry picked by George Osborne himself to become the next Governor of the Bank of England seems to be an angel sent from the heavens but who exactly is Mark Carney? At 48 years of age, Mr Carney has already held several positions of importance such as Governor of the Bank of Canada and is currently the Chairman of the G20’s Financial Stability Board. Moreover, as of 1st July 2013, he will be the first non-Brit to become the Governor of the Bank of England since its formation in 1694.

His birthplace of Fort Smith, Canada is about as distant from the world of high finance as my bank account balance. Yet he has managed to make the strides towards greatness, which has included a bachelor’s degree in economics at Harvard as well as a master’s degree at St Peter’s College, Oxford and a doctorate from Nuffield College, Oxford. Carney worked his way up the ranks through Goldman Sachs moving between London to Tokyo to greater prominence in a 13-year stint before heading his way towards the Canadian Department of Finance and then the Bank of Canada as Deputy Governor and then Governor.

Carney has been credited with shielding Canada from the worst effects financial crisis and has earned praise from the Financial Times and Time magazine as a top figure in the financial world. In 2012, Carney was presented many accolades including “Central Bank Governor of the Year 2012” by Euromoney magazine.

However to say that Canada survived the financial crisis would be a major understatement, they positively thrived through it. Canada’s risk-averse fiscal and regulatory environment meant that their banks were always well capitalised and as a result were poised to take advantage of opportunities that American and European banks could not seize.

The crucial feature of Carney’s tenure as governor remains his decision to cut the overnight rate by 50 basis points in 2008 only a month after his appointment. Wasting time is not something this man is accustomed to and hopefully other interventions will be in place in the near future. This choice was also very monumental because it was ahead of the pack. While the European Central Bank delivered a rate increase in July 2008, Carney anticipated the leveraged-loan crisis would trigger global contagion. He used a nonstandard monetary tool “conditional commitment” to hold the policy rate for at least a year to boost domestic credit conditions and market confidence. Output and employment began to recover from mid-2009 and the Canadian economy outperformed those of tis G7 peers during the crisis. Canada was also the first G7 nation to have both its GDP and employment recover to pre-crisis levels, targets that Britain just don’t seem to be able to hit in the next 5-10 years.

The credentials are everywhere for all to see. Mark Carney has achieved so much and looks like the man to get the UK economy buzzing again. However, an immediate impact is required or else the press will inevitable turn on him as not being good value for the high salary he’s commanded. There is much pressure on him, mostly due to his achievements and at a time when the Government has been trying to claim that recovery is in the air. His first challenge will be dealing with a monetary policy committee (MPC) that is just so accustomed to doing nothing. Lending to firms was negative again last month and given what Capital Economics has called “underwhelming effects” on the Funding for Lending scheme, it is hard to see what the driver for growth is going to be.

The UK economy will be going through a very difficult and delicate process over the next 5 years. Mark Carney is the man who will be in charge of the Bank of England in this period and there is no doubt he will be influential towards whatever the outcome. He has demonstrated his extensive knowledge of the world economy and his ability to take the initiative but is the British economy just a step too far? Or is Carney really the man to lead Britain into its next phase?


Contributed by Jordan Naidu

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