OTTAWA (Reuters) - Canada’s central bank is redefining the role of its No. 2 policymaker, introducing changes that may attract a broader range of candidates to fill the job when the current second-in-command, Tiff Macklem, steps down later this year.
To split off some of the responsibilities now undertaken by Macklem, the Bank of Canada’s senior deputy governor, the bank is creating the position of chief operating officer (COO), according to a job vacancy posted online by executive recruitment firm Boyden.
Until now, the bank’s No. 2 has been required to do the work of a COO, overseeing corporate planning and coordinating the bank’s operations, as well as helping to set monetary policy.
“The bank is redefining its management structure, which includes transferring the operational oversight that has traditionally been part of the senior deputy governor’s (SDG) role to the newly created position of chief operating officer,” the job description says.
“Reporting to the SDG, the COO will be devoted to managing the increasing complexity of the bank’s administrative functions, and ensure the operational sustainability, vitality and effectiveness of the bank.”
The restructuring of the upper echelons comes as bank Governor Stephen Poloz has his first chance since taking the helm last June to bring fresh faces into the bank’s six-member rate-setting Governing Council.
The bank is grappling with below-target inflation in Canada and sluggish exports that are holding back growth, a trend it said has been puzzling.
Macklem is leaving May 1 to become the dean of a business school in Toronto and Deputy Governor John Murray is retiring on April 30.
The planned changes would put the Bank of Canada more in line with the U.S. Federal Reserve, which has a standalone COO.
It also frees up the top policymakers to focus on economic analysis and monetary policy without the time-consuming distractions of issues such as building renovations or personnel.
The Bank of Canada confirmed that the dual responsibilities of the senior deputy governor would be reduced to focus on economics.
“This role is being redefined to emphasize the policy aspect,” said Dale Alexander, spokeswoman for the bank.
The senior deputy governor will continue to have ultimate responsibility for the bank’s operations but with the “added assistance of a COO,” she said.
The widely held view among central bank watchers has been that an internal candidate, likely a deputy governor, would succeed Macklem because someone with years of experience in the bank and an understanding of its inner workings was more likely to be able to take on those COO tasks.
But that assumption no longer holds true, and Macklem’s job could attract outsiders or economists who were otherwise deterred by those extra demands.
“It previously meant someone from the inside or someone who had worked at the bank would probably find it easier fitting into that role,” said Paul Ferley, assistant chief economist at the Royal Bank of Canada. “With them lessening that COO responsibility, it doesn’t make it as imperative.”
“It may not have prevented them hiring someone from the outside but certainly the hurdle isn’t as high as it used to be,” he said.
Ferley, who worked at the Bank of Canada earlier in his career, also said it could make the job “more attractive” to an economist who is interested in monetary policy but not so much in the operational side of things.
“There often was a feeling that the senior deputy governor spent an amount of time staying on top of the operations of the bank and didn’t have as much opportunity to stay involved in monetary policy analysis and monitoring the economy,” he said.
Macklem and his predecessor, Paul Jenkins, both had long histories in the Bank of Canada before stepping into the role of senior deputy governor.
The last four senior deputy governors did not go on to become governor, another possible deterrent to anyone who has aspirations for the top job.
Analysts so far have pointed almost exclusively to internal candidates as the strongest contenders to replace Macklem, with Jean Boivin and Agathe Cote the two mentioned the most.
Boivin, a former university professor, was a deputy governor at the central bank from 2010 until 2012, when he went to the finance ministry to become Canada’s finance deputy at the Group of Seven and Group of 20.
Cote was appointed deputy governor in 2010 after working her way up through the ranks of the institution after joining in 1982.
Both are native French speakers and Cote would be the first woman in the role.
“I think Agathe Cote may have a slight edge,” said Charles St-Arnaud, economist at Nomura Securities.
Deputy Governor Timothy Lane has been fingered as another possibility. He left the International Monetary Fund in 2008 to join the bank as an adviser to the governor. He was promoted to deputy governor in 2009.
Editing by Jeffrey Hodgson; and Peter Galloway