January 23, 2013 / 7:20 PM / 6 years ago

Carney says Bank of England should not rely on single individual

OTTAWA (Reuters) - Canada’s Mark Carney, the next Bank of England governor, pledged on Wednesday to ensure that policy decisions at the central bank do not rely too much on any one individual and said he would aim for clear and transparent accountability.

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

Former senior BoE policymaker Adam Posen told British legislators on Tuesday that the current Bank of England governor, Mervyn King, is too powerful. He said the situation will worsen when Carney, who is now governor of the Bank of Canada, takes over in July because he will have additional powers of financial regulation.

“I would make the distinction between the responsibilities of the institution, and the power of any individual within that institution,” Carney said in a news conference, when asked about the criticism, although he said he had not seen Posen’s testimony.

“Part of my responsibility when I am there is that as the Bank of England gets additional responsibilities ... is to ensure that the committee structure, the new governance structure, the other aspects, work to their full effect,” he said. “To ensure that the institution is discharging its responsibilities in the right way, it’s not relying on a single individual - it won’t be - and that accountability is clear and transparent.”

Posen’s comments were the strongest criticism so far from a recent member of the Bank of England’s Monetary Policy Committee alleging King’s lack of accountability. He said the governor rejected alternative views on how to boost the economy and excluded external members of the committee, who are appointed by the finance minister, from key discussions.

Other critics have derided King as an authoritarian “Sun King”, although, in fact, the BoE’s structure allows for more open debate than at the European Central Bank or Bank of Canada.

Carney, who is also chairman of the Group of 20’s Financial Stability Board, spoke to reporters after the Canadian central bank announced it was holding interest rates steady and that the need to increase rates was “less imminent”.

As for the Bank of England’s policy moves, he praised the Monetary Policy Committee for doing what he called an “admirable job under extremely difficult circumstances” and said he was happy that King would serve as governor through the end of June.

Britain’s economy has recovered much more slowly than its peers from the 2008-09 financial crisis and inflation has been above its 2 percent goal since December 2009. On Tuesday, King said he stood ready to provide more stimulus if needed, though economists don’t expect the central bank to add to its 375 billion pounds ($595 billion) of asset purchases any time soon.

Carney also said the BoE had played a key role in coordinating the global response to the crisis.

“Their analysis and leadership was a very important element in addressing the worst of the crisis,” he said.

He declined to say how he felt about Prime Minister David Cameron’s promise of a referendum by the end of 2017 on whether Britain should stay in the European Union. The BoE would manage its own mandate of price stability and financial stability within whatever political context the government and the British people decide, Carney said.

Reporting by Randall Palmer and Louise Egan; Editing by Peter Galloway

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