A year ago Rupert Murdoch was probably the most powerful unelected person operating in Britain. The media baron could seemingly choose prime ministers. Then came the phone hacking and police bribery scandal, after which politicians sought to distance themselves from him.
The title of most powerful unelected Briton now probably belongs to Mervyn King, the governor of the Bank of England. Witness the way he dispatched Barclays’ chief executive Bob Diamond two weeks ago in connection with the Libor rate-rigging scandal. Whoever succeeds King next year will have even greater powers. After all, responsibility for financial stability and banking supervision is about to be added to the central bank’s main task of running monetary policy. It’s vital for democracy that this authority is exercised effectively, transparently and fairly.
Who will be King’s successor when he steps down? And how will the new governor be made accountable? These questions have been brought into sharp relief by the Libor scandal. The front runner for King’s job has seen his chances knocked, while doubts have been raised about the central bank’s effectiveness and transparency.
The next governor will need to be something of a superman. Expertise in how to manage financial crises is probably the top requirement given that the euro could blow up and there wouldn’t be time for on-the-job learning. Strong management skills are also important as failure to delegate effectively would lead the incumbent to be swamped. Finally, the governor will have to be a good communicator.
Until the Libor scandal broke, Paul Tucker, one of the BoE’s deputy governors, was the favourite. He has a strong track record as a crisis manager. But his apparent failure to recognise early warnings that the Libor interest rate was being rigged has made him look naive.