Britain picks Canadian for BOE post

Nov. 26, 2012 at 5:22 PM
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LONDON, Nov. 26 (UPI) -- British Chancellor of the Exchequer George Osborne announced Monday the next Bank of England governor would be Mark Carney, head of the Bank of Canada.

It is the first time Britain has decided to hand the leadership role at the bank to a foreigner, The New York Times reported. The surprise move also comes as the BOE takes over the role of Britain's top regulator for banking, making the move a critical appointment.

The current regulating body, the Financial Services Authority, is closing in 2013. Current bank Gov. Mervyn King, meanwhile, is resigning in July.

"This is a new job. Previously, the focus was mainly on monetary policy. Now it is about financial stability, monetary policy and macro-prudential policy. The key is to get the right mix of policy and making sure there is proper coordination [with the Exchequer]," said said Simon Hayes, an economist at Barclays.

The Exchequer is the British equivalent of the U.S. Treasury Department.

Many had expected the government to pick BOE Deputy Gov. Paul Tucker to take over King's job. That promotion may have been scrapped after emails between Tucker and Barclays bank Chief Executive Officer Robert Diamond Jr. surfaced showing discussions on the London inter-bank exchange rate or Libor.

The emails suggest Tucker may have agreed that the rate should be suppressed, the Times said.

Barclays has agreed to pay a $450 million fine to settle charges that it manipulated the Libor, a scandal that has turned into an even wider investigation of other banks that may have attempted to do the same.

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