Mark Carney: 'Within Nine Months, We Could Have A Disorderly Brexit Stress Test'

Mark Carney seemed revolutionary enough in 2013 when he became the first non-British citizen to be appointed governor of the Bank of England. But the 53-year-old has since had to contend with a much greater upset: the U.K.’s vote to leave the European Union. Now he reveals that he spends half his time preparing the financial system and economy for Brexit, which takes effect in March. Born in Canada’s remote Northwest Territories and educated at a public school in Edmonton, Carney graduated from Harvard and Oxford before working at Goldman Sachs Group Inc. and the Canadian finance ministry. In early 2008 he became the eighth governor in the Bank of Canada’s history, winning praise for his quick reaction as the financial crisis developed. He succeeded Mario Draghi as chairman of the Financial Stability Board (FSB) in 2011, becoming the point man on global financial system reform. At the Bank of England, Carney has juggled Brexit, negotiating new regulatory standards, and adapting the 324-year-old institution to its expanded supervisory responsibility. As the BOE’s 120th governor, he says some disruption was in order. “You don’t need an outsider all the time, but at the time it helped.”

 

- Stephanie Flanders

Stephanie Flanders: Five years. If you think back to starting your tenure in this building, then you were mostly known as the guy with the star résumé who was going to be the first non-national governor of a major central bank. Remembering your expectations on that first day, how has the experience measured up?

Mark Carney: It has exceeded my expectations in terms of the quality of the organization, the importance of the issues, both the intellectual and practical policy challenges.

My expectation coming in was that the platform here would help increase the ambition and effectiveness of international [financial] reforms because of the expertise that’s present in the organization, the importance of the U.K. financial system, and because many of the ideas for not just fixing the problems that caused the crisis but potential solutions for a more resilient system had been generated in the U.K. I could help with that, and obviously I had the advantage of coming in as still chair of the FSB. It has very much met or exceeded expectations in all those respects.

Of course it’s hard to go from concept to agreed global policy and then have that implemented, but I think—others will judge—relative to my expectations it’s been pretty faithfully implemented.

Secondly, it was about securing the recovery here, which at the time I took the position [Carney was appointed in November 2012] hadn’t really begun, or at least it didn’t appear on measured statistics. By the time I showed up [Carney started in July 2013] it certainly had begun, and the question was how to embed that.