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Mark Carney named as new Bank of England governor

Mervyn King to be replaced by Bank of Canada governor, a surprise choice for the job.

Mark Carney named as new Bank of England governor

Mark Carney has been named as the new governor of the Bank of England, replacing Mervyn King at the head of a central bank which is still in crisis mode as the economy falters.

Carney, currently governor of the Canadian central bank, will take over a newly empowered institution when he replaces King in June, after the Bank is given new powers to regulate banks.

The Canadian – who described his new role as a 'major challenge' – is credited with shielding Canada's economy from the worst of the financial crisis, with none of the country's banks needing bail-outs. He has also recently said that banks should use their profits to boost capital rather than pay bonuses.

Having spent 13 years at Goldman Sachs, Carney joined Canada's central bank in 2003 and was made governor five years later.

Quizzed at a press conference about his decision to relinquish his role at the central bank of his native Canada, Carney emphasised that he had previously lived in the UK for ten years, while claiming to 'know a lot of people in the City and the UK'.

Biographical note: Mark J. Carney

Mr. Carney was appointed Governor of the Bank of Canada effective 1 February 2008, for a term of seven years. As Governor, he is also Chairman of the Board of Directors of the Bank.

In addition to his duties as Governor of the Bank of Canada, he serves as Chairman of the Financial Stability Board (FSB) and as a member of the Board of Directors of the Bank for International Settlements (BIS). Mr. Carney is also a member of the Group of Thirty, and of the Foundation Board of the World Economic Forum.

Born in Fort Smith, Northwest Territories, Mr. Carney received a bachelor’s degree in economics from Harvard University in 1988. He received a master’s degree in economics in 1993 and a doctorate in economics in 1995, both from Oxford University.

Prior to joining the public service, Mr. Carney had a thirteen-year career with Goldman Sachs in its London, Tokyo, New York and Toronto offices. Mr. Carney was appointed Deputy Governor of the Bank of Canada in August 2003. In November 2004, he left the Bank to become Senior Associate Deputy Minister of Finance – a position he held until his appointment as Governor of the Bank.

Carney, who takes the role as the UK economy effectively flatlines, commented: '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.'

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.”

“It has been a privilege to serve as the eighth Governor of the Bank of Canada.  I am proud of the Bank’s contribution to the resilience of the Canadian economy throughout an unprecedented period of global turmoil.  The Bank is helping to lead the reform of the global financial system.  It is introducing the most sophisticated currency in the world.  And as the Government of Canada’s fiscal agent, it is providing funds management and banking services with the highest reliability and resiliency.”

“Canadians can be confident that such leadership will continue.  The depth and quality of its human resources, the dedication of its employees and the clarity of its strategic vision will ensure that the Bank will continue to promote the economic and financial welfare of all Canadians.”

“I would like to thank the Board of Directors of the Bank of Canada, Minister Flaherty and Prime Minister Harper for having given me this opportunity to serve Canada. I have done so to the best of my abilities and am humbled by the support I have received from both my colleagues at the Bank and from Canadians across this great country.”

He beats favourite – and current Bank of England deputy – Paul Tucker to the role, as well as candidates including Santander bank chairman Lord Burns, Sir John Vickers, a former Bank of England economist who put his name to the government’s review on banking reform; and Adair Turner, chairman of the Financial Services Authority.

Chancellor George Osborne announced the five-year appointment in parliament today, speaking nine days before he delivers what is expected to be a gloomy Autumn Statement on the state of the economy. Osborne described Carney as 'an outstanding banker of his generation'.

'I look forward to working with Mark as we continue to rebalance our economy, deal with our debts, and equip Britain to succeed in the global race. We needed the best – and in Mark Carney we’ve got it,' Osborne added.

City surprise

City economists cautiously welcomed the appointment, pointing to Carney's strong record and good reputation at the head of the Bank of Canada. They added however that it was unclear whether his appointment would alter the Bank of England's policy leaning. 'Carney is generally seen as pragmatic and astute economist, rather than one with a predilection for one particular school of economic ideas,' noted JP Morgan economist Malcolm Barr.

Rob Carnell of ING Bank said other factors would influence the central bank's choice of policies: 'The funding-for-lending scheme remains the major policy initiative right now, and its success or otherwise will likely determine whether the Asset Purchase Scheme is dusted down once more, or passed over.'

King’s tough tenure

Mervyn King became governor of the Bank in 2003, first presiding over a period known as the ‘great stability’ and then the credit crisis and financial crash that began in 2007.  

King, alongside his former counterpart at the US Fed, Alan Greenspan, have been retrospectively criticised for their low interest rate policies of that time, which may have encouraged excessive lending and borrowing.

Since then, under King’s leadership interest rates have been kept at record lows, while the Bank of England has embarked on a huge asset purchase programme, spending £375 billion on quantitative easing to boost the economy. This programme has however proven controversial, with doubts about its benefits for the real economy. Meanwhile, inflation, as measured by the consumer prices index (CPI) targeted by the Bank of England, has averaged 3.2% over the past five years – above the target of 2%.

Many economists have questioned whether the Bank should slavishly stick to its inflation target. King himself used a speech last month to conclude that it was too soon to ditch the target, but that more leeway is needed to let the inflation rate drift away from 2.0% in order to take action to avert financial crises. ‘There may be circumstances in which it is justified to aim off the inflation target for a while’, the governor said.

'Upheaval' at the Bank

Osborne announced that Charlie Bean, one of two deputies at the Bank of England, had agreed to stay on for another year. But Tucker, the other deputy who was thought a dead-cert for the governor post, was not mentioned.

'Today’s appointment could well usher in a period of significant upheaval at the Bank of England,' commented Investec economist Philip Shaw.

Tucker, who has 32 years of experience at the Bank of England, may have lost out on the top job after being hauled in front of a committee of MPs this summer. He was accused of pressuring Barclays to manipulate its Libor submissions, claims that he strenuously denied.

19 comments so far. Why not have your say?

Keith Cobby

Nov 26, 2012 at 16:34

I suppose it is no more surprising than appointing a non-English person as coach for the England football team. He needs to have more success though!

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Nov 26, 2012 at 16:51

further underlines the impotence of the post in general, and the link of central bakers to the giant vampire squid that is goldman sachs. you could employ a milkman ( no disrespect to milkmen or women) to do as good a job. the only think he has helped to do to banks in canada is to make them the most highly leveraged banks in the world, relative to unencumbered equity.

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Middle East Mike

Nov 26, 2012 at 16:52

A welcome surprise.

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Geoff N

Nov 26, 2012 at 16:58

He looks to have the right credentials anyway.

He did a great job in Canada and I hope he can continue that here.

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David West

Nov 26, 2012 at 17:03

It is welcome, in my humble opinion, that somebody from outside the BOE has been given the job.

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Anonymous 1 needed this 'off the record'

Nov 26, 2012 at 17:18

His contract should state clearly and unequivocally that he is to have no contact whatsoever with anyone connected with Goldman Sachs. Without this, and despite his apparently excellent record as head of the Bank of Canada, he will be seen as just another in a long list of men who have infiltrated the malign influence of the Vampire Squid into national governments with no benefit to anyone but themselves and their 'former' colleagues.

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Philip Hackett

Nov 26, 2012 at 17:46

Is he a Bilderberg?

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Nov 26, 2012 at 17:46

It would be useful if CityWire did an article on exactly what powers the Governor of the BofE has. Given that many people thought that we paid Mervyn King £305,000 per annum because he had a lovely name it would be useful to know why someone with a much more boring name is to get £624,000.

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Nov 26, 2012 at 17:51

pretty close from wiki!

Carny or carnie is a slang term used in North America and, along with showie, in Australia for a carnival (funfair) employee, as well as the language they employ. A "carny" is anyone who runs a "joint" (booth), "grab joint" (food stand), game, or ride at a carnival, boardwalk or amusement park.

very intelligent man, british wife, speaks french, doctorate degrees from where the sun doesn't shine and one of the most powerful bankers on the planet, who upsets Jamie Dimon of JPM (course, he wouldn't upset Lloyd Blankfein of the Squid!).

only problem with intelligent men, they "transact" rather than "transform" and merely display conventional wisdom, not intelligence.

I wonder whether his £450,000 a year salary plus inflaiton proofed pension will be linked to any performance that affects anything in particular, beyond what would happens anyway.

rest assured that Osbourne has his next job lined up as a quid pro quo for his fully embracing the squid culture. someone check osbournes arms for the welts of the giant tentacle suckers.

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Philip Hackett

Nov 26, 2012 at 17:52

Yup! He's another Bilderberg. He has been chosen by Lord Rothschild. He will not be looking after us, the little people. He is another bought man.

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Roger Blake

Nov 26, 2012 at 18:55

He's got a good cv, but when good cv meets cr*p business, it's invariably the latter's reputation that remains intact. Good luck, he'll need it

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Keith Cobby

Nov 26, 2012 at 19:01

Andy Hornby had a good CV - top of his class at Harvard!

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Brian Kneller

Nov 26, 2012 at 20:13

This is a good move to break the mold Bilderberg or not. The banking situation is not working out, King & Osbourne have lost the plot as we proceed inexorably into the abyss. Some new blood is definitely needed and any change (within reason) must be better than where we are currently.

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Ron Ball

Nov 26, 2012 at 23:58

So, another former Goldman Sachs man is put at the centre of government and banking. I hope he is the right man for the job but I am uneasy about George Osborne praising him as an outstanding operator and the best man in the whole world for the job. I suspect he will look after his mates, the super-rich and the bankers and sod the rest of us. I hope I am wrong.

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Nov 27, 2012 at 01:31

stability 2003 to 2007, male bovine excrement. King was weak, he warned of the growing bubble in 2005, and did sod all about it following his initial heads up in 2005, keeping his head below the parapet rather than keep highlighting the increasing bubble. Why because cyclops told him so, so he abdicated his responsibility, a functionary, seat polisher, journeyman, failure. Didn't see it coming, BS, preferred to suck up for an extra period of time to keep his sinecure.

Harsh judgement. Yes, but I was aware of upcoming trouble and I am no economist.

Instead of being proactive, he was reactive, and then far too late. An egg head, and little practical experience and application ability.

As for Osborne, a sloppy wotsit, as he is in his speech (like Cameron) wanna be (I wanna) instead of enunciating his words (ditto Cameron-and siliband etc 'gonna'), goes for sloppy slurring of words. Means their policies are likely to be the same. These are supposed to be educated people, and I repeat the supposed.

Let us hope the new man is more exact and exacting and says what he means and means what he says.

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William Phillips

Nov 27, 2012 at 16:59

Have a look at Mervyn King's nickname according to Wikipedia, before it vanishes.

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Nov 27, 2012 at 17:15

do you mean "corrupt" or (economist)? :>)

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William Bishop

Nov 27, 2012 at 17:30

Find the tone of many of these posts a bit depressing - it is by no means a piece of cake being a top central banker, and Carney undeniably did a good job in steering Canada away from the financial crisis (although I have seen it suggested that latterly he may have allowed too much of a property boom to get going).

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Philip Hackett

Nov 27, 2012 at 18:12

He is here to do the dirty work for Lord Red Shield. Watch interest rates climb and a property collapse, which we should have had at the start of this mess. Remember that Gordon Brown warned the Cabinet in July 2003 that the economy would collapse in 2007. We the little people, will suffer again. The next collapse will be the biggest.

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