It’s official from the middle of 2013, Mark Carney will become Governor of The Bank of England. Chancellor George Osborne has publicly announced that his selection was to choose the most suitable person for the job. Both George Osborne and Mervyn King (current BoE Govenor) have spoken openly about their opinions and his suitability.
His native country Canada has had a similar institution helping small and medium-sized businesses for 65 years, and this has been a critical launch pad for many Canadian firms. Mr Carney will need to work to strengthen the Treasury’s current efforts in this area, as a way of transforming the finance environment for new and growing British businesses over the long-term.
The difficulty he faces is the role of the Bank of England (BoE) will have an expanded brief, including overseeing the health of the country’s banks. Clearly, it will be a tough and very challenging job.
Many analysts have spoken about the many challenges that will face the new chancellor, the most common issues are :-
- Mr Carney is taking over a BoE with greatly expanded responsibility, which is a big management challenge and means the governor will need to delegate more. The Bank’s deputy governors will need to be more involved in taking the lead in their particular areas.
- The BoE will need to move away from the environment of very low-interest rates and quantitative easing policy. (It is not a healthy policy over the medium term, for example in terms of returns for savers.) Mr Carney will need to develop an exit strategy, communicate and implement it gradually. This may play to Mr Carney’s strengths as he has won praise in the past for his communication skills.
- The BoE has a role as a key player in the financial services sector, to rebuild public confidence. Britain’s economy needs a banking sector that acts as servant, not master of the economy.
- Mr Carney has said that the problem is not the failure of banks to supply credit, but demand for it. It would be alarming to think that he doesn’t essentially understand the challenges currently facing the UK economy. If this is the case this appointment could become a grave failure.
- The BoE needs to help grow the British economy, leading to a growth in job creation. Employment is no longer the prime mission of the BoE, but creating more and better jobs needs to be a priority.
- Mr Carney needs to increase effective and planned lending to the real economy, focussing on development areas and creative environments where job creation and development of the economy would be potential and sustaineable. The experience has been, in many cases, quantitative easing doesn’t guarantee that loans go where they are most needed.
We wish him every success in this role. If he is successful, this will help lead to prosperity for all. On paper I agree with the comments made and believe he has the right qualifications, background and experience. There are clearly some failings in his understanding but let’s hope he is a fast learner. I believe those who are truly successful are not those who always have the right answer but more-so realise when they have made the wrong decision and correct it quickly. Time will tell.
welshmoneywiz 