Mark Carney is the current governor of the Bank of Canada heralded for having shielded Canada from calamity during the 2008 global financial crisis. Through active tutelage of monetary policy Carney was able to control inflation, increase central bank liquidity and keep interest rates at the lowest levels in Canadian history. The affect was to secure investor confidence and make Canada the best performing state in the G7 nations during the crisis. In fact, Canada recovered to pre-crisis GDP growth rates quite quickly compared to its G7 peers. On July 1, 2013 Mark Carney is set to govern the Bank of England.
It will be the first time in history that a non-Briton will be governing the Bank of England. While Carney may not be a well-known figure outside of Canada, his economic insights developed in Canada will soon be tested in the ever-evolving Eurozone crisis. Is Carney up to the task? Is his central banking experience of a single state enough to prepare him for the political and economic battleground that the European Union has become? A look at his past will answer these questions.
Mark Carney, born in the Northwest Territories and received his Bachelor’s degree at Harvard and his Master’s and Doctorate at Oxford. After a successful run through the private sector in investment banking, Carney settled into the public sphere under the Department of Finance and later the Bank of Canada. It was Carney’s young age, 43, that had many questioning his ability to run the central bank of a world-class economy. Carney’s successful governance of the Bank of Canada serves as a lesson on monetary policy.
However, it is not just Mark Carney’s success in helping Canadians avoid the economic downturn that makes him particularly well suited to handle the Eurozone crisis. Carney’s economic wizardry is matched by his communication skills.
All too often central bankers repel citizen attention by using technical economic language. Carney on the other hand, engages the media frequently and does so with a well-spoken, inviting and cordial tone that encourages citizen interest in monetary policy. This is an immensely valuable quality in a deeply politicized and contentious Eurozone. In order to effectively manage the Eurozone, central bankers will need to engage citizens in a less technocrat fashion if tensions are to be resolved. Since central bankers affect the monetary policies that impact the austerity plans which citizens in Europe often disagree with, monetary policy must therefore be enacted alongside adequate explanations to the public. In this way, an end to the Eurozone crisis has a major political dimension to it. And Mark Carney’s proven ability to engage in simple language with the media, offers a great opportunity to quell tensions in Europe by engaging with concerned citizens.
Another factor contributing to Carney’s potential to ease tensions in the Eurozone is the fact that he is a Canadian. As an impartial arbiter of economic data, Carney can be open about the necessary pragmatic decisions that need to be made that will transcend political rivalries. Carney has little skin in the Eurozone crisis other than the motivation to do what needs to be done. This fact may lead to positive, accurate and intelligent policy on behalf of the Eurozone - a task unmet amidst political and social turmoil.
A third reason why Mark Carney is primed to quell Eurozone woes is the fact that his private sector experience in investment banking alongside his academic knowledge, makes his skill-set a truly remarkable commodity. It may well have been Carney’s insights into the inner workings of international finance firms that allowed him to predict and implement government polices that work well alongside private industry. Carney’s time at Goldman Sachs brought him to Toronto, London, Tokyo and New York. To say Carney has the international experience necessary to make perceptive decisions in an international context is an understatement.
In sum, Mark Carney’s successful governorship of the Bank of Canada, a PhD in economics, an international investment banking career and his delicate communication skills align into a resume fit for serving the entangled Eurozone crisis. While many may be unaware of who Mark Carney is, he has a great potential to make history in a masterful handling of the Bank of England in July 2013. A task that if completed will undoubtedly affect the way monetary policy is enacted thereafter.