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Flying the flag

18 April 2012 By Peter Thal Larsen

Must the governor of the Bank of England be English? That’s the intriguing question raised by a report that Mark Carney, the governor of the Bank of Canada, has been sounded out as a possible replacement for Mervyn King, who is due to retire next year.

In most other developed countries, the question would not even arise. It’s inconceivable that, say, an American could be head of the European Central Bank, or that the Federal Reserve would choose a German or Chinese chairman.

The UK is different. It has long shown an admirable willingness to install foreigners into senior positions. Almost half the chief executives of the constituents of the FTSE 100 index aren’t British. Quintessentially English sporting events like Wimbledon and the Oxford-Cambridge boat race are dominated by foreign contestants. Even England’s national football team was, until recently, managed by an Italian.

But such internationalism has its limits. The governor of the Bank of England is no faceless technocrat; he is the most powerful non-elected official in the country. The job has become more powerful, and more political, since the financial crisis. The central bank has embarked on a controversial bond-buying spree and is set to receive sweeping new powers for regulating banks and pricking future financial bubbles.

The governor will be at the very heart of economic and social policy. King has been rightly criticised for the Bank of England’s lack of transparency and accountability. The last thing his successor will need is a row over nationality.

Besides, there is no pressing need to look abroad. Chancellor of the Exchequer George Osborne, who will appoint King’s replacement, can choose from a strong home-grown field of regulators, current and former bank chief executives, academics and former civil servants. Even if Carney was interested – both the Bank of England and the Bank of Canada have dismissed the report – there’s no guarantee he would get the job. But if the government chooses him, it should first insist that he apply for a British passport.


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