The Bank of England announced on Monday that Mark Carney, the governor of the Bank of Canada, would become the new head of the Bank of England, indicating a shift in the expectations of central bankers.
Carney is set to take over for Mervyn King in June when King’s term is up. He will move from managing a $1.75 trillion economy to a $2.4 trillion economy, OregonLive reports.
Following the financial crisis, central bankers in each of the major Western economies have come out with greater expectations that they will be able to reduce and eliminate risks to the global financial system.
Central banks also have new powers that may allow them to better monitor and detect issues in the world economies. The Federal Reserve gained further oversight authority under the 2010 Dodd-Frank Act, and the European Central Bank is on its way to becoming European banks’ chief regulator. The Bank of England will also merge with the U.K.’s Financial Services Authority to oversee Britain’s financial markets, according to OregonLive.
King played a crucial role in the 1990s reforms in which the Bank of England, which stopped supervising banks in 1997, aimed to bring inflation to two percent. He also taught at MIT and the London School of Economics before becoming the bank’s chief economist through most of the 1990s. King began as the bank’s deputy governor in 1998 and governor in 2003.
Carney, the chairman of Canada’s Financial Stability Board, carried the Canadian economy through the worst financial downturn since the Great Depression, and while banks around the world were collapsing, Canada’s banks remained relatively stable and sound.
Carney has extensive experience in financial markets apart from his time as a central banker. He spent 13 years with Goldman Sachs and has a Ph.D. in economics from Oxford, though he never worked as an academic economist, OregonLive reports.
The decision by the U.K. to bring Carney in as head of the nation’s central bank indicates that Britain is willing to go abroad to find the best talent suited to the position of regulating its financial markets. Additionally, the decision demonstrates that governments have put increased value on the broad experience of their central bankers.