The Chancellor, Gordon Brown, is expected to meet Mr George in the next few weeks to discuss his re-appointment. "The Government wants stability at the top of the Bank and the Chancellor and Mr George are getting on well together now," said one source. Mr George's current five-year term ends in June.
Technically, the Governor is appointed by the Queen on the advice of the Prime Minister. But Tony Blair is said to be a supporter of Mr George already and in any event it is inconceivable that he would make a recommendation without the endorsement of his Chancellor.
The Governor is appointed by law on fixed five-year terms. Reports over the weekend suggested, however, that Mr George might be given an extension of two years so that a new Governor could be in place to help oversee Britain's possible entry into a single currency in the next Parliament.
If Britain decides to join economic and monetary union it is likely to happen around 2003. The Governor would become Britain's representative on the committee of the European Central Bank, which will be responsible for overseeing the single currency and fixing interest rates.
One option might be for Mr George to take up a second five-year term but with a gentleman's understanding that he would step down earlier than that.
However, there will be nothing in law to enforce this since the new Bank of England Bill currently going through the Commons is the same in respect of the Governor's term of appointment as the old one.
The likelihood of Mr George being offered a second term is underlined by the lack of speculation about other candidates. One possible successor is Mervyn King, one of the Bank's two deputy governors, but he does not formally assume the post until the new Bill becomes law.