Has Carney really got the golden touch?

The new Governor of the Bank of England has been universally welcomed – but not by Ben Chu

As a political conjuring trick, George Osborne’s unexpected announcement this week that Mark Carney will replace Sir Mervyn King as the Governor of the Bank of England next year was an unmitigated triumph. The Fleet Street  pundits and the City wallahs were united in agreement that the Chancellor had pulled of a coup by persuading Mr Carney, the 47-year-old Governor of Canada’s central bank, to apply for the job.

Here, we were told, was a trained economist, a respected regulator and a new broom to sweep the dusty corridors of Threadneedle Street clean. But the most attractive part of the CV was Canada’s impressive economic record in recent years, attributed to Mr Carney’s skills at the central bank.

The country waltzed through the thickets of the global economic crisis of 2008-09 with barely a scratch. Its banks, which were also under the supervision of the monetary authority, did not need bailouts. Not since General Wolfe captured the Heights of Abraham from the French in Quebec have Canadian feats so gripped the British imagination. But as any sensible investor knows, one should never buy at the top of the market. And Mr Carney’s reputation now seems to reside on a vertiginous precipice.

Canada indeed coped well with the 2009 global bust, experiencing the shallowest recession of any G8 country thanks to conservative macroeconomic policies in the preceding boom. But that was more due to the traumatic debt crisis of the 1990s than any inspired monetary activism by Mr Carney. A natural resources boom, which lifted Canadian commodity exports, has helped the country recover strongly this time around, too.

As for the robustness of Canada’s banks, that also owes more to the 1990s crisis than anything that Mr Carney can claim credit for. Politicians put shackles on lenders after they went bust two decades ago after making bad loans. This ensured domestic banks could not join the irresponsible financial party that kicked off on both sides of the Atlantic in the 2000s.

And what of Mr Carney himself? Like the present governor he has made supportive noises about the global “Occupy” protests suggesting a social conscience. Yet that did not stop him holding out for a hefty pay rise on his present salary for accepting the Bank of England job. His remuneration will be £624,000 a year, against Sir Mervyn King’s £305,000. Even allowing for the fact that Mr Carney’s pension is less generous, that still amounts to a significant payday. Mr Carney will take British citizenship to show his commitment to Britain. Yet he still insisted on a five-year term, rather than the eight that the successful candidate was supposed to serve. Mr Carney will also be keeping his position as chairman of the G20’s Financial Stability Board (FSB), which co-ordinates global banking reform.

The Governor’s chair – already seen as too big for one person to handle –will thus be filled by a part-timer. And when it comes to banking reform Mr Carney looks like the status quo man. Much has been made of an attack he attracted last year from Jamie Dimon, the boss of JP Morgan, for his attempts, as FSB chairman, to force banks to hold larger capital buffers under the new “Basel III” capital rules.

This, some suggested, shows Mr Carney’s steadfastness in the face of a hectoring financial lobby. Yet the arguments about Basel are really a banking establishment civil war. Even under its toughest interpretation, Basel allows the banks to run with extremely modest capital buffers. It is telling that Carney’s former employer, Goldman Sachs, leapt to Mr Carney’s defence when he was savaged by Mr Dimon.

When the Bank of England financial stability director, Andy Haldane, argued in September for a truly radical new approach to banking reform, he received a petulant rebuke from Mr Carney. The Canadian has also aggressively attacked the US “Volcker Rule”, which will prevent American investment banks playing the global capital market casino, in strikingly similar terms to the banking lobby.

Sir Mervyn has been a powerful advocate of splitting up lenders into their retail and investment arms to protect taxpayers from future bailout costs. Mr Carney, by contrast, is intensely relaxed with the so-called universal banking model.

The Canadian Mounties always get their man. Yet we will now have to wait seven months to find out whether the man Mr Osborne delivered is the governor the country needs.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

BI Manager - £50,000

£49000 - £55000 per annum + competitive: Progressive Recruitment: My client is...

BI Project Manager - £48,000 - £54,000 - Midlands

£48000 - £54000 per annum + Benefits package: Progressive Recruitment: My clie...

VB.Net Developer

£35000 - £45000 per annum + competitive: Progressive Recruitment: If you're pa...

SAP Business Consultant (SD, MM and FICO), £55,000, Wakefield

£45000 - £55000 per annum + competitive: Progressive Recruitment: SAP Business...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game