By Richard Johnstone | 26 November 2012
Chancellor George Osborne has announced that the next governor of the Bank of England will be Mark Carney, the current head of the Bank of Canada.
Carney, who has been in charge of the Canadian central bank since February 2008, will take over from Sir Mervyn King on July 1 next year for an eight-year term. However, Carney has indicated that he intends to serve for only five years.
Osborne today said that Carney was the ‘outstanding central banker of his generation’ and would bring ‘a fresh new perspective’ to the post.
‘Mark Carney is the outstanding candidate to be governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job. He has done a brilliant job for the Canadian economy as its central bank governor, avoiding big bailouts and securing growth.’
Carney will chair the Bank’s Monetary Policy Committee, which has responsibility for setting interest rates in the UK. The committee also decides on the size of the quantitative easing programme – or Asset Purchasing Facility – which buys government bonds. The value of the APF is currently £375bn.
Carney’s appointment comes as the government prepares to give the Bank of England additional powers from next April, in a regulatory shake-up following the economic crash. The Financial Services Bill will abolish the Financial Services Authority regulator and transfer responsibility for oversight of the financial system to a new Financial Policy Committee in the Bank.
When in post, Carney will also chair this committee, which will be responsible for monitoring and responding to any systemic risks to the UK financial system. Through a subsidiary, the Prudential Regulation Authority, the Bank will also become responsible for day-to-day supervision of banks and other financial services firms that have significant balance-sheet risk.
Osborne said that the reforms to ‘put the Bank of England back in charge of regulating our financial system’ would ensure ‘that we don’t repeat the mistakes of the past decade’.
He added: ‘Mark Carney is the perfect candidate to take charge of the Bank as it takes on these vital new responsibilities. He will bring strong leadership and a fresh new perspective.’
Welcoming the appointment of his successor, King said: ‘He represents a new generation of leadership for the Bank of England, and is an outstanding choice to succeed me. Since Mark became governor of the Bank of Canada, I have worked closely with him and admired his contributions to the world of central banking, in which he is widely respected.’
Carney is also chair of the Financial Stability Board of the Group of Twenty major economies, which is charged with strengthening global financial regulation after the financial crisis.
A Canadian citizen, he previously worked for Goldman Sachs in London, and has a PhD in economics from Nuffield College at Oxford University. He has indicated he will apply for British citizenship.
• Osborne also revealed today that deputy Bank governor Charlie Bean will not stand down as planned on June 30 next year. Bean has instead agreed to stay on until July 2013, to help in the transition to the new regime.