Carney, emperor of the Bank of England?
Feb 5, 2013 / 10:53 am
From Britain's point of view, Mark Carney is already sending coded messages about how he intends to govern the Bank of England when he becomes the first foreigner to take over the storied institution.
So when the Bank of Canada governor testifies before the Treasury Select committee on Thursday, another first among the many his appointment represents, MPs will have plenty to inquire about during what is essentially a two-hour job interview.
Top of the list, say MPs on the committee, is Carney's Toronto speech in December when he mused aloud about tying monetary policy, and hence interest rate settings and unconventional easing, to economic growth during "exceptional" times.
The comment, which barely got noticed in Canada, caused a major stir in Britain, where its application appears more likely given the beleaguered economy and already loose monetary policy.
Even last month's innocuous comment, in Canada, about favouring a team approach to managing got dissected in London's Daily Telegraph as "distancing" himself from the current governor Sir Mervyn King, who was under attack at the time as being too powerful.
The issue is critical, said John Thurso, a Liberal Democrat MP and member of the committee, because with the Bank of England taking on new responsibilities as the regulator of financial institutions, Carney will de facto become the most powerful governor the 319-year-institution has ever seen.
"The question is, does the governor become the constitutional monarch of the bank with the power, but who will defer to the advisers of the committees, or does he become the emperor of the bank?" he said.
"We're not looking for an emperor."
Carney is also almost certain to face questions over his much publicized special demands, including a shorter five-year term instead of the usual eight, and his generous pay packet that will make him the highest paid central banker in the world, by far. With perks and a 250,000-pound housing allowance, his total compensation has been estimated at 874,000 pounds (CDN$1.3 million) a year.
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