Aside from importing another country's central banker who has attained "rock star" status in the arcane ways of monetary policy setting, another intriguing aspect of Mark Carney taking this highest of high-profile jobs is that he will wield unprecedented power as far as BoE heads are concerned once he starts. If his predecessor Mervyn King was regarded by more than a few as too ostentatious by some in his manner, Mark Carney need not put on any airs since he will in fact wield powers beyond those possessed by his predecessors. It's all in the name of regulating banks better that new powers will be vested in Mark Carney. Testifying before the MPC, Adam Posen stated:
Bank of England Governor Mervyn King is too powerful and planned changes at the bank will worsen the situation by the time Canada's Mark Carney succeeds him, a former senior policymaker at the bank said on Tuesday. Adam Posen, speaking to legislators about three years on the bank's Monetary Policy Committee that ended in August, said the bank's non-executive directors, finance ministry officials and politicians were unable to effectively hold King to account.The Telegraph reiterates this point about power:
New laws going through parliament are set to give the Bank of England's governor sweeping powers over financial regulation, something that raised further difficulties, Posen added.
That will not be true in the UK. When he takes over at the Bank, Carney will become the most powerful national central banker in the world – able to direct UK lenders to restrict all kinds of lending as he sees fit. The only check on his control is that he will have to operate via a set of committees.Ditto CTV News:
The issue is critical, said John Thurso, a Liberal Democrat MP and member of the committee, because with the Bank of England taking on new responsibilities as the regulator of financial institutions, Carney will de facto become the most powerful governor the 319-year-institution has ever seen."The question is, does the governor become the constitutional monarch of the bank with the power but who will defer to the advisers of the committees, or does he become the emperor of the bank?" he said.It all fits in with his intention to target the money supply more closely. That said, while concentrating a lot of lending discretion in the hands of one individual in the name of enhancing regulation may be just what is needed to shake up the BoE at this point, what will lawmakers do if this experiment goes awry? In a way, importing a subject from other parts of the realm already is an extreme action which will not likely be repeated. Just think of the uproar if they end up with the monetary equivalents of, say, Sven-Goran Eriksson or (heaven forbid) Fabio Capello.
What do all three have in common? When they were appointed, the English public very much lauded the selection of these superstars in their fields of endeavour. Hopefully, though, Mark Carney will better be able to deal with being in Britain's harsh public eye and get on with the job at hand. Expectations are high once more with their latest import, and the stakes are so much greater here than advancing in mere international football tournaments since the future of a global financial capital is at stake.
Will there always be a Bank of England?