I am as surprised as everyone at the news that Mark Carney is leaving his post as Governor of the Bank of Canada to take over at the Bank of England. This is a shrewd move for the U.K.: Carney’s time at the Bank of Canada has been a success, and he also brings with him his not-inconsiderable personal credibility that can no doubt be used to great effect at the BOE. But where does that leave us?
The first thing to remember is that Carney’s departure and the arrival of a new governor will change nothing in the short or even medium terms. The BOC’s mandate to use its policy instruments (including, but not limited to, interest rates) to keep inflation at an average of two per cent per year predated Carney by 15 years, and it won’t be revisited for another four years. Carney has mentioned many times that monetary policy is a team sport; the Bank’s forecasts and decisions are very much the results of a group effort. The Bank’s collective expertise remains (almost) entirely intact—and the BOC’s mandate and views on how to achieve it won’t change with the governor’s departure. There’s no reason to think that the Bank will change its policy stance when Carney leaves.
It seems unseemly to address the question of successors at this point, but I’ll give it a try. Off the top of my head, I can think of three obvious candidates
- Tiff Macklem is the Senior Deputy Governor, and as such is currently second-in-command at the Bank of Canada. He has just returned to the Bank after a tour at the Department of Finance, where he held the same job Mark Carney had before being named governor.
- Jean Boivin is a former Deputy Governor who recently transferred to the the Department of Finance, moving along the familiar path previously followed by Carney and Macklem. One thing to keep in mind is that Jean Boivin wrote his thesis at Princeton under the direction of Ben Bernanke, and they have collaborated on several academic projects.
- UBC economics professor Paul Beaudry was—I am given to understand—seriously considered for the post of governor the last time it came open, and he is one of several academics (Gregor Smith of Queen’s is another, and I’ll stop there for fear of not mentioning other well-qualified colleagues) who could be brought into the Bank.
Or it could be someone else; at this stage, it’s really hard to tell. One thing I can’t help notice is that there are several very strong francophone candidates (there are others in addition to Boivin and Beaudry). This may be the time we see the first francophone named as Governor of the Bank of Canada.