Analysis: Canada's Carney may ruffle feathers at Bank of England

Fri Jan 25, 2013 1:03am EST
 

By Louise Egan

OTTAWA (Reuters) - Mark Carney, the next head of the Bank of England, has shaken up the stuffy culture at the Bank of Canada with his unconventional approach. The big question is will he be able to do the same at an even more hierarchical institution - the Bank of England.

Carney is known as a whipsmart central banker and financial regulator. But Reuters' interviews with former central bank officials reveal his behind-the-scenes role in changing the way the secretive Canadian central bank is run.

Carney raised the bar for economic research, streamlined communications and brought in more financial markets expertise, the staffers say. But he also could be abrupt and dismissive when he disagreed with people or ideas.

With the Bank of England under fire for its centralized structure and the high level of power in the hands of the governor, Carney's record in Ottawa provides clues to how he might approach those challenges in his new job.

When he took the helm in Canada in 2008, global financial markets were imploding and some said it was not the time to gamble on an organizational revamp that could disrupt operations and unsettle staff.

But he did gamble. That year, not only did he cut benchmark interest rates to 1.5 percent from 4 percent and inject billions of dollars into money markets, but also he undertook the bank's biggest restructuring since the early 1970s.

It worked, making it easier for specialists to work together and respond to the crisis, the former officials say.

"If you remember what was going on in 2008, this was the period of the acceleration of the global financial crisis and a number of people said to me in early 2009, 'you know, I'm sure glad we did this'," said David Longworth, whose 36-year career at the bank culminated in a 2003-2010 term as deputy governor.   Continued...

 
Bank of Canada Governor Mark Carney listens to a question during a news conference upon the release of the Monetary Policy Report in Ottawa January 23, 2013. REUTERS/Chris Wattie