The Chancellor reported a surprise to Parliament yesterday. He announced that after all, and after the denials, the Head of the Canadian Central Bank, Dr Carney, will be the next Governor. Labour agreed with the appointment
, and the Chairman of the Treasury Select Committee who gets to interview him as well more or less accepted that he will be the next Governnor. I send him my congratulations.
I am pleased the Chancellor did not appoint one of the figures who has been responsible for the Bank and the FSA’s conduct in recent years, as it is difficult to make the case that they have done a good job. Let us hope that Dr Carney will bring new thinking and greater purpose with him from the new world. He is Central Bank Governor to a smaller country that has its own currency whilst trading substantially with a much larger neighbour. He has never, along with the Canadian establishment. suggested Canada should join the US dollar, nor proposed a pooling of sovereignty as part of their single market arrangements with the USA.
More importantly, Canada got through the last few years without major banking disasters. Canada lost less output and recovered more quickly. We have things to learn from Canada’s relative success.
My only worry at the moment about this appointment is the timing. Dr Carney remains Canada’s Bank Governor until May 2013. He takes up post here in July 2013, and may not start taking decisions or making major contributions until the autumn of next year. I think we need new thoughts and new policy now from our central bank.
On his agenda should be the following questions:
1. How do we restore the commercial banks to health more quickly, so they play a role in economic recovery?
2. How much more, if any QE is advisable?
3. How long should interest rates penalise savers, and damage pension fund liability calculations?
4. How does the Uk get a grip on inflation?
5. How does the Bank work to promote low inflationary growth?
Readers will know my answers to these questions. I look forward to hearing Dr Carney’s answers when he appears before Parliament, when I will give you an update.