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Reflections of an outgoing president: Mark Carney


In March 2020, Mark Carney will fulfill his mandate as president of the Bank of England and therefore he has given several interviews to the specialized press where he discuss speaks about the challenges that his successors will face in the coming decades. This column summarizes such challenges: overcoming an eventual “liquidity trap”, driving the British financial system in a post- Brexit world and measuring and controlling the financial risks generated by global warming.


It is difficult to find a qualifier to describe the career of Mark Carney, perhaps the only person who has been president of two central banks, the Bank of Canada (2008-2013) and the Bank of England (2013-2020). Carney holds a bachelor’s degree in Economics from Harvard, and a PhD in the same discipline from the University of Oxford. He began his professional career at Goldman Sachs, a banking group where he remained 13 years, accumulating experience in sovereign risk, emerging market bonds and actively participating in the management of the Russian financial crisis of 1998.

Mr. Carney career in the public sector began in 2003, when he entered to the Bank of Canada, in which he remained ten years. During his tenure as president of that institution he faced the global financial crisis of 2008, lowering interest rates and guaranteeing abundant sources of liquidity to local banks, which is why Canada was the only member of the G-8 that came out virtually unharmed from such a crisis.

In 2013 Mr. Carney agreed to lead the Bank of England, during this period he had the opportunity to deal with issues as diverse as Brexit -of which he has been a great critic-, the distorting role of the dollar in international trade or increasing inequality in the distribution of wealth in developed countries.

Finally, on March 16, 2020 Mr. Carney will end his term as head of the Bank of England, and in these last weeks the specialized press, considering that his cycle comes to the end, has interviewed his to collect his perceptions about the main issues that central banks in developed countries will face in the coming years. Let's review some of such reflections.

Undoubtedly, Mr. Carney's greatest concern is the possibility that the central banks of developed countries may not have the capacity to face a severe contraction of the economy. In his opinion, the world economy is heading towards a “liquidity trap”, a situation in which the monetary policies of central banks lose the ability to revive the economy via the reduction of interest rates and the injection of large masses of money at very low cost.

If the world economy actually gets trapped central banks, to the frustration of officials like Mr. Carney, will remain hands tied waiting for national governments to achieve the political consensus required to implement the classic fiscal policies within their reach, i.e.: reducing taxes and augmenting public spending.

Regarding the regulatory challenges of the financial system, during Brexit negotiations the British government should pay particular attention to avoid committing to align to Brussels its regulatory powers over the financial system. A financial system as complex as the British cannot outsource those responsibilities in an entity that has its own agenda in these topics that will not necessarily coincide with the British point of view. In this sense, maintaining the freedom to change the capitalization levels of the national banks at will, to regulate the supply of credit, is non-negotiable.

As for the environmental challenges, the British financial system should see the control of global warming as an exceptional business opportunity, given the large investments that will be required to adapt the different sectors of the economy to the new environmental standards.

The financial system can help promote global warming control by conditioning the granting of financing to meet environmental standards, but such measures must be implemented within a broad regulatory context that involves many more actors than those in the financial sector. Such actors help to set important goals to reduce this phenomenon and also provide credible mechanisms to enforce the achievement of those goals.

From March 17, 2021, Mr. Carney will assume as temporary special envoy of the United Nations, and assist in preparation of the Conference on Climate Change to be held in Glasgow in November 2021. The reference framework that financial and non-financial corporations must meet to estimate the environmental risks that Mr. Carney promoted during his tenure at the Bank of England is expected to be transformed after the Glasgow event into a universal benchmark for evaluation of sustainable investments.

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