Mark Carney's Next Move
The Walrus|July/August 2021
The economist led two central banks through two era-defining upheavals. Is politics his future?
CURTIS GILLESPIE

It took over three centuries and a Canadian to make it happen, but when Mark Carney was hired as governor of the Bank of England, in 2013, he became the first foreigner to run the institution since it was founded, in 1694. The response to his appointment was rapturous, bordering on parody. The British press alternately called him a banker from “central casting” and a “rock star.” Carney, stepping away from the same position at the Bank of Canada, was just forty-eight years old. He was brought on to modernize the UK’s ossified banking system, and kudos poured in from the left, the right, and the centre. “Mark Carney is the outstanding central banker of his generation,” former chancellor of the exchequer George Osborne told the House of Commons.

Then, Brexit.

From the moment then prime minister David Cameron floated a referendum to leave the European Union, in the early months of 2013, until the day the exit was made law, Carney was increasingly in the spotlight. He was asked, repeatedly, what impact leaving the EU might have on the economy. Tradition dictated that the bank governor remain above the political fray. Carney, however, was blunt in his assessment that the decision could lead to economic disaster —  he even worried publicly about the possibility of a “cliff-edge Brexit.” He did not venture this as offhand opinion: he was, after all, governor of the central bank. Nevertheless, this was seen as taking sides. Suddenly, in certain parts of the country and some segments of its media landscape, he went from being Hugh Grant to Hannibal Lecter.

The fact that Carney’s original assessment would be proven right wasn’t politically relevant. Nor did it stem the criticism, even after he was asked by the Conservative government, not once but twice, to extend his original five-year contract so as to maintain stability and continuity in the Brexit rollout. The drama — which ended for Carney last year, his tenure finally complete — may have been theatrical, but it also highlighted the many ways that electoral politics can be a dirty, unpredictable business in which intellectual analysis and raw emotion do not always share the same cab. For Carney, it’s an experience that may yet come in handy.

In the months since Carney arrived back in Ottawa, where he now lives with his wife, British economist Diana Fox, and their four daughters, he’s landed a few plum positions: he’s taken a seat on the board of digital-payment unicorn Stripe, and he’s now heading up asset-management firm Brookfield’s expansion into social and environmental investing. He has also continued his role as United Nations special envoy on climate action and finance. Still, there have been whispers about what, exactly, he plans to do next. With the release of his first book this spring, Value(s): Building a Better World for All, they only got louder.

In early April, Carney was a keynote speaker at the Liberal party’s federal convention. During his speech, he committed himself to the cause, stating, “I’ll do whatever I can to support the Liberal party in our efforts to build a better future for Canadians.” It’s a line that has drawn many close readings in the media. The Canadian Press reported that his appearance was a “political coming out party of sorts” that marked “the first public dipping of his toe into partisan waters.” Pundits, and their unnamed inside sources, speculated that Carney could be on the next ballot, with some venturing that he could soon be minister of finance. Others have even gone further, naming him a potential successor to Justin Trudeau as Liberal leader and, if voters say so, prime minister. Still, Carney isn’t committing either way. At a recent virtual event held by the University of Toronto’s Rotman School of Management, he was asked whether politics was in his future. Carney played it coy: “I never say never.” He is certainly primed for a leap into a leadership position, but is that a job he actually wants?

ON FEBRUARY 1, 2008, Carney, then forty-two, got a promotion: he was to become governor of the Bank of Canada. Even with his impressive CV, it represented a rapid ascent for the relatively young man who grew up in Edmonton: undergrad at Harvard, doctorate at Oxford, and success as an investment banker with Goldman Sachs in London, Tokyo, New York, and Toronto. He switched from Goldman to the public sector in 2003, landing roles at the Bank of Canada and the Department of Finance before being named governor — the youngest central banker in all of the G20.

Almost immediately, a calamity hit. Carney was still familiar with the world of Wall and Bay Streets, and he perhaps sensed, ahead of other central bankers, that the financial realm, faltering since 2007, was in jeopardy. Just a month into his tenure, while EU member states were raising interest rates to reflect a healthy economy, he cut Canada’s overnight rate by fifty basis points — a kind of fiscal booster shot that anticipated and, for Canada at least, moderated the trouble to come: the disastrously overleveraged state of credit default swaps and obligations that would ultimately overwhelm global markets and bring about the Great Recession.

There’s a chasm between the day-to-day job of being a bank governor and what the public might imagine they actually do — at least to the extent that anyone thinks about bank governors at all. Craig Wright, chief economist at RBC for over two decades, explains that the main job is to hit the inflation target the bank and the government deem advisable, which, in Canada since the late eighties, has been somewhere between 1 and 3 percent. On average, says Wright, Carney always found that 2 percent sweet spot. “That’s what you aim for in normal times,” Wright says. “Mark has been through a couple of abnormal times.”

In some ways, a bank governor is a bit like the captain of a giant steamship crossing the Atlantic — let’s call it the SS Stability. Know your charts, set a judicious course, keep a close eye on things, and it should be smooth sailing. Unless, of course, there’s a hurricane (credit crunch) or rogue wave ( recession), at which point all hell breaks loose, your crew starts to panic, and every decision, big or small, is monumental. If you choose wrong, you’re going down.

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