Editorial: Threadneedle Street's new broom

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The Independent Online

Only four months ago Mark Carney was issuing the flattest of denials that he was interested in becoming Governor of the Bank of England. That he has now accepted the job may mean he had his arm twisted by the Chancellor, George Osborne, which would make his appointment highly political. But this did not prevent the announcement receiving a broad welcome yesterday – including from the shadow Chancellor, Ed Balls.

Nor is it hard to see why. As head of Canada's central bank, Mr Carney presided over banking in a country that experienced one of the smallest booms before the big global bust of 2008 and has weathered the subsequent downturn best. His record is his chief recommendation.

Bringing in an outsider also makes sense, both because the role of the Bank is changing as it assumes a bigger supervisory role and because of the patent shortcomings of the outgoing Governor. Mr Carney's take on the Occupy Wall Street movement, which he said he endorsed, because in his view inequality was now out of control, also shows an attractively unconventional side.

But the rejoicing should not be unconfined. The rejection of the Deputy Governor, Paul Tucker, who was seen as the favourite, means the rejection not only of what was unsatisfactory about the reign of Sir Mervyn King, but of what was good about Mr Tucker, including his deep knowledge of banking and his extensive experience of the Bank of England.

In the end, though, it may have been his perceived closeness to the banking industry that scuppered his chances. And in some ways that is a disadvantage Mr Carney shares, given that he spent some of his early career at Goldman Sachs. The message appears to be that a banker's banker was wanted, but also a new start. Mr Carney certainly promises that.

One key question is whether he will be able to keep the necessary distance from his old industry, and not all the signs are good. He seems less demanding than some on the ring-fencing that banks should observe between the different parts of their business. Canada's economy is of quite a different order from Britain's and the banking sector is proportionately much smaller. The pressures facing the new Governor are immense. Mr Carney has his work cut out.