In what is being described as a surprise move, the Bank of England has reached out to North America for its next head, appointing the Bank of Canada's governor Mark Carney to be its next governor, succeeding Sir Mervyn King. Carney's appointment to a five-year term is effective July 1, 2013. He will continue to serve in his current position until June 1, 2013, and will remain chair of the Financial Stability Board, the group of central bankers and policy makers responsible for developing global agreements geared toward improving bank and financial system stability.
In a Bank of Canada press release, Carney said: "I am honored 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 center, the City of London; and a crucial point in the Bank of England's history as it accepts vital new responsibilities."
Carney continued: "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."
Carney's appointment, according to the Wall Street Journal (which it called a "bombshell announcement)," the Wall Street Journal noted, "... represents a major break from tradition in the U.K., which traditionally has picked fixtures of the British establishment to be governor. Mr. Carney beat out longtime Bank of England veteran Paul Tucker for the job." The Wall Street Journal article also observed: "Mr. Carney will become the 120th governor of the Bank of England just as it inherits sweeping new powers, making it one of the world's most powerful central banks and boosting the governor's status as one of the U.K.'s most powerful individuals. In addition to setting interest rates and shepherding the U.K.'s monetary policy, the central bank is slated to assume responsibility for regulating the U.K.'s massive banking and financial system."
[As fallout from the global financial crisis continues to affect the banking industry, there's more scrutiny than ever before on the capabilities and performance of financial services regulators. Read Sheila Bair's 4 Types of Dysfunctional Regulators.]
Regarding Carney's replacement at the Bank of Canada, its Board of Directors will form a Special Committee comprised of independent directors whose mandate will be to undertake a recruitment process for the selection of the next Governor. Governors of the Bank of Canada are appointed by the independent directors, subject to the approval of the Minister of Finance and the federal Cabinet.