A dozen years ago, there was a minor uproar in England when a foreigner, Sweden's Sven Goran Eriksson, was appointed to manage the England football team. Was there really no Englishman capable of doing the job? The question was asked again when Svennis, who seemed to see the job as an opportunity to meet women and launch bizarre money making schemes (any takers for a CD of his favourite music??) was succeeded in the post by the Italian Fabio Capello. Fabio was less of a swordsman but, like Sven, looked to maximise his outside earnings in less than judicious ways. Neither had conspicuous success with the actual football side of things, and the Little Englanders rejoiced when true blue Roy Hodgson was appointed to the job earlier this year, just in time for the squad he inherited from Capello to stink out the joint at the European championships.
Unperturbed by the failure of high-priced foreign talent at the FA, Chancellor George Osborne has stunned most observers by hiring Mark Carney, currently Governor of the Bank of Canada, as the next Governor of the Bank of England. Announcing the appointment, Osborne described Carney as "the outstanding central banker of his generation". Ominously, that's a title previously held by Alan Greenspan.
Osborne wanted Carney for the job so badly that he's basically allowed him to write his own contract. Normally the Governor serves an 8-year term, but Carney only wants to serve five years, starting in May 2013. And he's going to earn a cool 624k Sterling a year (just about an even mil' in dollar terms), more than twice what his predecessor, Sir Mervyn King, was taking home. Supposedly the difference largely reflects the fact that Carney will not enroll in the Bank's highly lucrative pension scheme.
There's no reason to doubt Carney's credentials. Although he's just 47 years old and has only been Governor of the Bank of Canada since 2008, he's been in and around the levers of financial power in Ottawa for almost a decade. He's head of the financial stability committee of the G20. Prior to switching to the public sector, he was with Goldman Sachs (now there's a surprise) for 14 years. He has a PhD from Oxford and an English wife, so the cultural shock won't be too much for him, though he may have to cultivate an interest in cricket if he is to step fully into Sir Mervyn's shoes. Carney's sporting prowess is as a hockey goaltender: he played for Harvard.
Even with Carney's track record, however, the step up from Ottawa to London is a big one. Toronto has come on in leaps and bounds as a financial centre -- it's no longer "a second rate Cleveland", to quote an old putdown -- but it's nowhere near the top of the pile. While it's true that Canada, during Carney's term in office, has weathered the financial crisis better than most wealthy countries (though Canadians don't want to believe that), that can't be entirely credited to the Bank, or to its current leadership.
The Canadian financial landscape is vastly different from what Carney will encounter in the UK, mainly because Canada shunned much of the deregulatory madness that gripped the UK and the US a decade or so ago. There was a big turning point in 1998, when the government turned down two mega-mergers that would have reduced the number of major banks from the traditional "Big 5" to three. The Big 5 still dominate domestic banking today. Foreign involvement in the sector is strictly limited. Although the banks were allowed into the brokerage industry, mainly to stop it falling into American hands, they are still largely, and to their immense chagrin, excluded from the insurance business. Last year the government even imposed new rules on banks' mortgage lending, which is having the effect of gradually letting the air out of the housing market, especially in Toronto and Vancouver.
This bears so very little resemblance to the free-for-all that still largely exists in London that you have to wonder just what Osborne wants Carney to do. It may well be that Carney's track record, and indeed his non-Britishness, will provide cover for the government to take a tougher line with the banks on regulatory issues, something which the banks have successfully resisted up to this point. Certainly, if I were at one of the big UK banks or at the British Bankers' Association, I'd be looking at Carney's imminent arrival with some trepidation.
In Canada, of course, the speculation will now begin on who gets Carney's job when he leaves. One fearless prediction: it won't be a Brit.
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