Carney carries Canadian lessons to the Bank of England

Wed Dec 12, 2012 6:17am EST
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By Solarina Ho and John Tilak

TORONTO (Reuters) - The Bank of Canada's Mark Carney mused about priorities in reply to a question about the lessons he would take to his next job in London, but said he would only discuss Britain's needs when he talks to a House of Commons committee next year.

Asked about lessons he would take to his next position, as the head of the Bank of England, Carney stressed the importance of speedy, transparent action to address potential flashpoints.

He felt Canadian policymakers were open about the depth of their troubles, for example, in the asset-backed commercial paper market and had benefited from the bank's flexible inflation target, which underpins monetary policy.

"We didn't have bank failures and we didn't have other issues ... in part we didn't have those because we made tough decisions in a timely fashion," said Carney, who will leave the Canadian central bank on June 1 and become Bank of England governor on July 1.

He stressed that none of his comments were directly applicable to the British central bank and it would not be appropriate to comment on British policy ahead of planned testimony to the British Parliament's Treasury Select Committee.

"So the first thing is transparency," Carney said. "You have to level with people on the scale of the problem. It does no good to try to spin your way out of the crisis, if you will.

"Secondly, the importance of having a plan, explaining that plan and then executing the plan ... Someone has to take a decision, take control, and we played a role in that."

Carney also said a Canadian strength was the strong coordination among the major financial authorities, as well as the depth of talent at the central bank.   Continued...

Bank of Canada Governor Mark Carney speaks to the business community during a luncheon in Toronto, December 11, 2012. REUTERS/Mark Blinch