The 325-year-old Bank of England created some waves in the staid world of central banking six years ago when the then Chancellor of the UK appointed Mark Carney, a Canadian, as its Governor. The 53-year-old Carney was the first foreigner to be appointed to the post, having earlier been the Canadian central bank Governor.
After taking over in July 2013, Carney had apparently hoped to leave office in 5 years around 2018, but deferred his exit to next year to see Britain through the ‘Brexit’.
The UK government is once again said to be scouting for potential candidates to fill up the vacancy.
So, what has been the experience of the UK government with a foreign governor? Who better to check that with than the Chancellor of the Exchequer, Philip Hammond, who was here in Mumbai on a brief visit. And he gave an unequivocal thumbs up to the unusual arrangement, calling it ‘a positive and good experience’.
Asked to comment on the relationship and experience of dealing with a foreign governor, he said: “Well, the Bank of England is independent. And the governor is fiercely independent. But we have had a good experience with Mark Carney. The fact that he is Canadian hasn’t had any impact at all on his ability to do the job. “He was hired because he was the most capable individual available to take it on. And I think we would not want to select future governors on any other basis. We would pick the best available talent wherever it comes from around the world. Obviously it is important to have someone familiar with our systems, language and institutions. But within those obvious constraints, I would expect that we will look at future appointments only on merit and merit alone.”
Asked if he would be willing to repeat that experiment, he said: ‘Yes. Indeed’.
‘London cannot be a corner cutter’
Can the UK government do something to ease the capital requirements for Indian banks ? To this, Hammond replied: “I understand that because of capital constraints, people will reconsider their footprint. Our job is to make sure that London will be the last place they will consider withdrawing from.
We hope it remains the most attractive destination for Indian banks . That is the government’s position vis-a-vis Indian banks at themoment.
I have no reason to expect that that will change.” When asked about the higher costs imposed on banks because of the increased capital requirements,Hammond explained:
“We went through a severe banking crisis in 2008, and right at the top of our list is the obligation to maintain safe and stable bankingsystem.
“And that requires banks to have appropriate amount of capital to ensure financial stability.
There is no future for London in being a corner cutter.
London has to be the best regulated financial centre in the world so that it is not only safe and secure to do business but also competitive