MARK CARNEY
The man who made monetary policy sexy is about to leave town.
Eighteen months ahead of schedule, Bank of Canada governor Mark Carney is exchanging his job in dreary old Ottawa for the top post at the Bank of England in the high-voltage capital of world finance.
It’s the next step in the spectacular career of the whiz kid from Fort Smith, N.W.T., who transformed the role of Ottawa’s central banker from a behind-the-scenes job at the stodgy, inscrutable Bank of Canada into a source of global star power.
Amedia darling with a flair for the controversial, Carney, 48, took Ottawa by storm after his surprise appointment as the bank’s governor in February 2008.
Carney took the helm just months before the global economic crisis that erupted several months later.
Armed with a winning smile, a self-deprecating wit and an ability to translate economics into ordinary language, the former investment banker struck a chord with Canadians who had zero awareness of the central bank until he came along.
Carney cites his wide public exposure as a reaction to the global crisis, which put relentless pressure on him throughout his stint at the Bank of Canada.
“We had a financial crisis almost immediately when I showed up. You over communicate in those situations,” he said.
But, he told Global TV, “we need to be more transparent as central bankers (even in ordinary times). We have to try to explain ourselves so the man and woman on the street understand it and can get on with their lives.”
So well did the one-time Goldman Sachs executive succeed in projecting himself onto the national stage that he has been plagued by rumours that he has an eye, ultimately, on the job of Canadian prime minister.
“I do not have political ambitions,” he felt obliged to inform the British parliamentarians vetting last February his appointment as Britain’s central banker. “If I had political ambitions, I would have pursued them in Canada.”
Located in a glass tower down the street from Parliament, the Bank of Canada affects the life of every citizen.
It designs and distributes currency and, more importantly, adjusts its key interest rate (the main lever in monetary policy) to influence the borrowing rates that commercial banks charge consumers, homebuyers and businesses.
There has long been talk of upgrading the bank’s outreach and Carney’s predecessor — gravelvoiced former bureaucrat David Dodge — did improve communications. But Carney has gone beyond all expectations, revolutionizing the institution’s public image and claiming a spot for himself among Ottawa’s glitterati.
A guy’s guy who played goalie for Harvard’s hockey team, reputedly ran a marathon without any special training and is a fan of the Edmonton Oilers, Carney fit in well, socially, in Ottawa’s prominent media circles.
He appeared on TV talk shows, drew big audiences for speeches across the country and even emceed the swank Politics and the Pen literary gala with co-host John Baird, the foreign affairs minister. With his departure from Ottawa imminent, a small group of journalists held a private do for Carney at which he was presented with a Canadian flag that had flown on the Peace Tower above Parliament.
While known inside the bank as a tough, demanding boss, Carney projected a relaxed, engaging aura in public.
It is unlikely any other central banker ever quoted Yogi Berra to MPs, once telling the upright members of the Commons finance committee that inflation means “a nickel ain’t worth a dime anymore.”
Another time, after being pressed by the media for weeks about a possible run for the Liberal leadership, he finally remarked: “Why don’t I become a circus clown?” And when told in 2011 that he’d been chosen “Most Trusted Canadian” by Reader’s Digest, Carney chuckled. “It’s hard to say that without laughing, isn’t it?”
At finance between 2004 and 2007, Carney worked well with Jim Flaherty and, in 2008, the minister catapulted his senior departmental official into the central banker’s role. Flaherty considered Carney an ally in the struggle with the 2008-09 recession, but insiders said the minister eventually began to grumble privately about Carney’s soaring popularity. There is no doubt Carney plays by his own rules. He angered the business community by saying hundreds of billions of dollars in cash accumulated by Canadian corporations is “dead money” that should be reinvested to strengthen the economy. He said he understood the frustration behind the Occupy Wall Street protests, dismissed the highly politicized “Dutch disease” argument that western Canadian resource reliance undermines Ontario’s manufacturing and warned the government not to rely too heavily on foreign workers to fill jobs here. During a television appearance last year, he offered his thoughts on the outcome of the U.S. presidential election — surely a first for a Bank of Canada chief. Overall, Carney is given credit for using his communications skills to prop up all-important investor and public confidence during the worst of the recession. And, lent credibility by the fact that Canadian banks largely escaped the global financial chaos in 2008, Carney took a hand in the international effort to slow the financial meltdown and repair the banking system afterwards. His performance was widely noticed. In 2009, he made the Financial Times’ list of “Fifty Who Will Frame the Way Forward” and was named the 21st most influential person by Time magazine in 2010. His rise to global prominence was cemented when he was named head of the Group of 20’s Financial Stability Board, putting him in charge of a worldwide drive effort to rein in the commercial banks whose reckless dealings precipitated the chaos five years ago. Last November, announcing Carney’s appointment as head of the 319-year-old Bank of England, British Chancellor George Osborne praised him as “the outstanding central banker of his generation.” Only because Osborne was willing to cut the term of the appointment from eight years to five did he take the job, Carney pointed out. That fits with his timetable for returning to Canada with wife Diana and their four girls. His touting as a possible contend-
‘A nickel ain’t worth a dime anymore,’ Carney once told the Commons finance committee
er for the Liberal leadership was triggered by news Carney and his family vacationed at the seaside Nova Scotia home of Liberal MP Scott Brison, a well known Carneyfor-leader promoter. The two are old friends and Bank of Canada officials rejected allegations that accepting Brison’s hospitality was a conflict of interest. But the whole affair was the kind of messy political involvement that central bankers avoid at all cost. “There is an expectation that the central bank governor should be seen as being neutral in all things political,” BMO deputy chief economist Doug Porter said at the time. Referring to the headlines over Carney’s visit with Brison, he said, “What we’ve seen recently is the other edge of a double-edged sword. When you are in the public eye so much, as this governor has been, there are a lot of pluses but there can be minuses. Your every action is closely scrutinized.”
If anything, the scouring of Carney’s activities will be more unforgiving as he comes under the microscope of Britain’s waspish tabloids. His Bank of England compensation — about $1 million a year — had already raised eyebrows before Diana reportedly complained on Twitter about the difficulties of finding a house in London despite her husband’s $400,000-a-year housing allowance. “That’s rich,” fumed one media outlet.
It’s known that Carney is scratching his head sometimes these days about taking on another daunting task at the Bank of England. Britain’s economy is mired in the most tenacious slump in two centuries and Europe as a whole is in recession.
“This is a major challenge,” he explained after his appointment. “It is very important for the global economy that the U.K. does well, that it succeeds in this rebalancing of their economy, that the reform of the British financial system is completed.”
Carney will have expanded responsibilities in Britain as the Bank of England’s regulatory control over banks and investment houses is being broadened.
As recently as last summer, he had denied any interest in becoming Britain’s central banker. But Carney was characteristically unapologetic for leaving Ottawa 18 months before his seven-year term as central banker was up. “I was never going to be governor of the Bank of Canada forever.”