Counterparties: Canada’s wonkiest export

November 26, 2012

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The Bank of England has imported its next governor. Mark Carney, 47, currently the head of Canada’s central bank, will take over from Sir Mervyn King on July 1. the BoE’s release is at pains to point out that “as a Canadian citizen he is a subject of Her Majesty The Queen”; it also mentions that he used to work for Goldman Sachs — just like ECB chief Mario Draghi, Italy’s Mario Monti, and William Dudley of the New York Fed.

This appointment marks a new breed of central banker, Neil Irwin writes. Unlike King or Ben Bernanke, both academic economists, Carney’s schooled in the “messy, legalistic world of overseeing banks and financial markets”. This will be particularly important because the BoE will soon resume bank oversight.

Carney’s also the head of the Financial Stability Board, and has become arguably the biggest champion of Basel III. He’ll be keeping his job at the FSB, FT Alphaville notes.

What will Carney’s term as the head of BoE be like? For one, count on the push for higher bank capital standards to continue. In this Reader’s Digest Canada interview, Carney said Canada made it through the financial crisis because “our banks had more capital than most banks around the world”.

You can also expect Carney to speak his mind: his dictum is “complacency is really the enemy in finance”, which helps explain his repeated warnings to Canadians that low rates could fuel a housing bubble.

Carney’s approach, according to this 6,000-word Euromoney profile from October, has been reformist, but not radically so. Carney was willing to spar with Jamie Dimon over capital requirements, but he isn’t necessarily a fan of breaking up big banks and he has criticized the Volcker Rule. He’s described as “finance’s new statesman”, but he also has a “zeal for regulation and government supervision”.

Martin Wolf writes that Carney will need that love of government — he’s entering a job that’s “inescapably political”. — Ryan McCarthy

On to today’s links:

How China’s premier saved a Chinese insurance giant — and made his family billions – NYT

Mobile phones — especially 3G models — make economies grow faster – Quartz

Big Pharma
Industry-funded drug trials are 3.6 times more likely to yield positive results – WaPo

It’s time for a minimum tax on the wealthy – Warren Buffett
The latest solution to America’s Congressional budget dysfunction? Tim Geithner – WSJ
The White House’s new report on how the fiscal cliff will affect the middle class – White House

Sham directors: the fake board members who hide the activities of tens of thousands of offshore companies – Guardian

New Normal
The three dimensions of inequality: global, educational/technological and plutocratic – Brad DeLong
The marginal tax rate of America’s poor is more than 30% – Evan Soltas

The linguistics professors who cracked a 250-year-old Freemason code – Wired

The Fibonacci investor who had an epiphany after listening to Coldplay for 11 hours in a row – Bloomberg

The NYT has always understood marginal tax rates, but from now on, it will display that knowledge – Margaret Sullivan
CJR calls for a WaPo paywall – CJR

SEC chairwoman Mary Schapiro to step down – Dealbook
President to nominate SEC Commisioner Elisse Walter to lead agency for one year – WSJ

Advanced Strategy
The most effective way to raise low-end wages is “simply to raise wages” – Ron Unz

Added Value
How the Chevy Volt came to have an API – Ars Technica

EU Mess
Goldman would prefer not to underwrite deals with Spanish and Italian banks – Bloomberg
Europe still can’t agree on whether or not to write off Greek debt – Reuters

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