Canadian Carney ‘terrific choice’ for global financial watchdog

G20 leaders chose Bank of Canada governor Mark Carney as the next chairman of the Financial Stability Board on Friday.

The Swiss-based board’s job is to stop the world’s biggest banks and financial institutions from engaging in risky business of the kind that triggered the economic meltdown of 2008.

Carney, 46, is a Harvard and Oxford-trained former investment banker.

He was a deputy minister of finance and Canada’s top finance official at the G7.

He also worked for 13 years as an investment banker at Goldman Sachs.  This gives him an inside understanding of the industry he will be regulating.

“I think it’s a terrific choice. Mark has the unique advantage of having worked in modern financial markets,” said John Kirton, co-director of the G20 Research Group at the University of Toronto.

“To regulate financial firms like Goldman Sachs you really have to understand what it’s like to be a trader or an investor to work for those firms, to know how they’ll operate, how they’ll try and sneak around regulations or how they will react when governments lay down a new set of rules and come in to supervise what’s being done. Mark has that knowledge and experience that few other people do.”

‘Appointment reflects Canada’s superior performance’

“His appointment is both a tribute to his personal qualities and a reflection on Canada’s superior performance in monetary, fiscal and financial sector policy areas,” said Canadian Prime Minister Stephen Harper at the wrap-up to the G20 meeting in Cannes, France.

Banking regulation is strong in Canada and closely supervised which explains why no banks or financial institutions failed in the last economic crisis when so many in the United States and Europe did. This adds to Carney’s credibility. 

Carney has already shown the world of finance he can stand up to big bankers. 

In September Jamie Dimon JP Morgan Chase vehemently disagreed with proposed regulations to force banks to hold more capital to protect their depositors.

“Mark Carney basically replied ‘We’ve seen what that style of thinking and approach has brought over the past several years when it was precisely the big American banks like Jamie Dimon’s that were going bust and had to be bailed out by the taxpayers,’” Kirton said.  

“So Mark took the broadside right in the face and then gave it back in full force. And that really did enhance his reputation as a regulator who wouldn’t pull his punches.”

Last week Carney said he expects the board to take on more of a “policeman” role to make sure countries implement tougher rules for their financial institutions.

Carney will remain governor of the Bank of Canada. His position at the FSB is part time. 

Link:

- Biography of Mark Carney