Canadian central banker, Mark Carney, has been appointed as BoE
governor after no British candidates were viewed as being
uncompromised by corruption
Scottish news: Bank of England governor Canadian as no British bankers viewed as untainted by corruption
Report by Jamie Mann
After widespread fears that no British banker had an untarnished reputation - following the Libor and other corruption scandals - to fill the post of Bank of England (BoE) governor, the UK government has appointed the current Canadian central bank chief, Mark Carney – the first foreign governor for 318 years.
Despite numerous reports that the current BoE deputy governor Paul Tucker was the favourite for the role, Mr Carney will on the 1st of July 2013, take on a responsibility which no other UK candidate appears to have had the reputation to be trusted with.
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In addition, given that Mr Carney has been appointed, after a highly publicised process, by the government, the widespread belief that the BoE is independent is further dispelled.
Chancellor George Osborne said of Mr Carney's appointment: "He is quite simply the best, most experienced and most qualified person in the world to be the next governor of the Bank of England,"
Commenting on the news, Scottish financial journalist and banking commentator Ian Fraser told Scottish Times:
“All five of the UK-based candidates were to a greater or lesser extent tainted by scandal. This is perhaps unavoidable given the corruption that is now considered to have become rampant in the country's banking and financial sectors over the past decade or so.”
Analysing the backgrounds of the other candidates for BoE governor, Mr Fraser highlighted why Mr Carney was perhaps the most secure choice: "
- Paul Tucker would appear to have sanctioned and even positively encouraged Libor rigging by Barclays at the height of the crisis
- Adair Turner was a director of Standard Chartered at a time when the Asia focused bank was associated with various questionable practices, was chairman of Merrill Lynch Europe at a time when it was hugely active in egregious securitizations, and he has not exactly covered himself with glory at the FSA since becoming its chairman in October 2008
- Howard Davies set in motion the UK's useless "light touch limited touch" regulatory regime as founder chairman and chief executive of the FSA
- Terry Burns is chairman of one of the worst banks in Britain, at least where customer service is concerned, Santander UK
- SirJohn Vickers was probably the least tainted of the five but one could argue that, given the way in which the Independent Banking Commissions proposals were watered down, the bankers might regard him as a soft touch.
In contrast to Mr Fraser’s synopsis, Chief Executive of the Scottish Financial Enterprise (SFE) Owen Kelly told Scottish Times:
“Mark Carney is a hugely respected and experienced central banker and economist and his appointment to the role of the Governor of the Bank of England is to be welcomed and reflects the openness of the UK to international talent.
“He was chosen from a field of very strong candidates to take on a difficult job at a time of great challenges not only in the financial sector but throughout the economy.”
The UK’s central bank will seek to recover from the its battered reputation, decimated by scandal, particularly Libor, following the aftermath of the 2008-2009 financial crash.
Under Mervyn King and operating through an indefinite economic depression, the BoE’s London home is set to lose its status as a global financial capital, with rival business hubs in New York, Singapore and Hong Kong set to overtake. Hong Kong is expected to push the UK capital into third place by as early as 2015.
However, it is uncertain as to whether the new governor can turn things around for the UK central bank.
Mr Carney is no stranger to the BoE’s current governor Mervyn King.
In an official announcement from the Bank of Canada (BoC), governor Carney said:
“I am honoured to accept this important and demanding role, and to succeed Sir Mervyn King with whom I have worked closely over these past five years and from whom I learned so much.
“This is a critical time for the British, European and global economies; a decisive period for reform of the global financial system including its leading financial centre, the City of London; and a crucial point in the Bank of England’s history as it accepts vital new responsibilities.”
Mr Carney, who has also spent 13 years with investment bank Goldman Sachs and is a chairman of the G20’s Financial Stability Board, has received praise for withstanding the shock wave of the 2008-2009 economic crises.
No Canadian banks required a bailout since the crunch started, whilst in the UK, an estimated £1tn was essential to stop the financial sector from insolvency.
Similarly, Canada has not been implicated in the Libor scandal which has cost somewhere between $500tn (BoE estimate) and $800tn.
Given the tainted reputation of the BoE and how global trust in the UK’s financial sector and its entire regulatory apparatus has collapsed, questions arise over the soundness of the SNP’s policy of remaining inside a monetary union with the rest of the UK after independence.
With such unpunished widespread corruption in the UK’s financial system centred on London, First Minister Alex Salmond may feel pressure to reconsider this policy and so reassure Scots that their financial system post-independence will be properly regulated.
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