This week, the Governor of the Bank of England ventured far beyond the Square Mile to give a speech in Nottingham – the city, as it happens, where I was born. Like a national leader, he was accompanied by a posse of journalists. Like a national leader, he gave a press conference after the main event, and – in a folksy touch, worthy of Bill Clinton and other Great Communicators – he talked exclusively to the local paper. After all, even the capital of the east Midlands does not host the country’s chief banker every day.
Now it may be that it was the hoopla attending Mark Carney’s appointment that alone dictated the high profile he has subsequently enjoyed. George Osborne pulled off quite a coup when he told the Commons that arguably the world’s most respected central banker had reversed his initial refusal and agreed to become the first foreigner to take the top job. But it is not as if, since that announcement, Carney himself has exactly shunned the limelight.
He made a much-praised appearance before the exacting Commons Treasury Committee. He gives press conferences. On his first day at work, he joined commuters on the Tube. He and his (British) wife “chillaxed” earlier this month at the upmarket Wilderness Festival in Oxfordshire, where they have family connections. His sartorial choices are widely remarked upon, while his name is rarely mentioned in the media without the term “rock star” appearing nearby. One way or another, the Canadian is fast becoming a cult figure, at least on this side of the Atlantic.
But could there be more to his star status than an air of professional competence, a “cool” dress sense and a gift for presentation? And is it on his initiative, or ours, that he has acquired the aura he has?
There was a time, not so long ago, when central bankers were to be seen very occasionally, and almost as rarely heard. And when they did speak, the words were as Delphic as they could possibly be. The plain-spoken resignation of Rupert Pennant-Rea, after he admitted an affair conducted in part on Bank of England premises, was a colourful, and slightly shocking, exception. That was 1995.
But anonymity, or something close to it, was to remain the norm for at least another decade, and not just in Britain. As chairman of the US’s Federal Reserve, Alan Greenspan came to be revered as the wizard binding the spell of the American boom, and it was not only the markets which hung on his every word. But it was the presumed results of his direction, not his appearance or character, that made his name.
Indeed, much of his influence lay in what was not known about his thought processes; it lay in the mystique. It should also be recorded that he retired (at the age of 79, two years before Lehman Brothers filed for bankruptcy) just in time to escape the consequences of his own irrational exuberance.
Also from the late 1990s, I recall annual press conferences at the Bank of France. An even more understated magician, in the most stylish of suits, walked the length of the bank’s intensely gilded hall, to deliver his characteristically elegant account of his year’s work. Like Greenspan and other central bankers of the time, Jean-Claude Trichet was not the household name he later became. At the time, it was the office and the institution that bestowed their lustre on him.
Trichet’s evolution from cypher to character – when he moved to the European Central Bank, steering it through the global financial crisis and the early stages of the euro’s meltdown – exemplifies the change. In the space of just a few years, the man running the bank became better known than the institution. For decades – centuries, perhaps – it had been the other way round. In those years of banking crisis, between around 2007 and 2010, Jean-Claude Trichet had lost his anonymity; his name and his appearance were widely recognised. He was Europe’s banker, an elite civil servant in the classic French mode, and he inspired trust in millions of ordinary individuals who might have had only the sketchiest idea about the role of the ECB.
Trust is probably the key here. As institutions proved fallible, public confidence passed to individuals – or not, as the case might be. The central banker became a public figure and it suddenly mattered much more who he was and how he presented himself. Trichet’s successor at the ECB is a case in point. Would the single currency be as relatively stable as it looks today if Mario Draghi had not promised a year ago, in public, to do “whatever it takes” to save the euro? And not only said that, but – far more important – been believed?
This new responsibility for central bankers – to be out there and to inspire confidence – may be a product of the media age or the global financial crisis, or probably a combination of both. But it makes the appointment of a new central banker a matter for public engagement in a way it never really was. The question of who was to succeed Mervyn King was discussed far beyond political and banking circles. The merits of runners and riders were subject to intense, and unprecedented, scrutiny, as was the basic principle: what is a central banker for? That is, in part, how it became acceptable to consider a foreigner for what is a quintessentially national job.
From Russia, where a woman – Elvira Nabiullina – has been running the central bank for the past year, to India, where Raghuram Rajan, a former IMF chief economist who called the financial crisis correctly, now has the task of keeping this vast emerging economy afloat, to Germany, where the President of the Bundesbank, Jens Weidmann was, somewhat to his own surprise, keynote speaker at this week’s ambassadors’ conference, central bankers are being coaxed into the wider world.
But, as always, it is in the United States – where President Obama must decide imminently whom he wants to succeed Ben Bernanke at the Fed – that the change is most striking. The contest has shaped up as a duel between the former Treasury Secretary and academic, Larry Summers, and Bernanke’s current deputy, Janet Yellen, though a dark horse candidate is not excluded. As in Britain, the discussion transcends the boundaries of banking and politics. Fierce advocates have sprung up on both sides: East Coast against West Coast; academics against auditors; men against women. And again, the key is not just banking competence, and who foresaw what as the financial crisis brewed, but the capacity to inspire public trust.
Mark Carney is certainly making the Bank of England a more open and interesting place. He has the Chancellor’s ear. He has impressed MPs with his straight-talking competence, and members of his Nottingham audience described him as “a thoroughly nice bloke”. But in Britain, as elsewhere, it is early days for the central banker as communicator, and confidence can be lost far more easily than it is won. After all the buffeting from austerity and crisis, the public cannot but yearn for a central banker who cuts a convincing figure on the national stage and sounds as though he knows what he is doing. But the rock star-like adulation that has marked his extended British honeymoon risks setting him up to fail.