The announcement that Mark Carney was to succeed Sir Mervyn King as the Governor of the Bank of England caused something of a stir. This was, of course, the first time a non-Brit was elevated to the role (Carney is Canadian) since the Bank was created back in 1694. Carney also started with a somewhat pugnacious tone, claiming that existing Executive Director of Financial Stability Andy Haldane didn’t have a “proper understanding of the facts” even before he took up the job.
Now, Carney has taken up the role of Governor, having assumed office on 1 July. With fears of being run by a Canadian who could be turning paper notes plastic now just a distant memory, attention has turned to the real jobs at hand, which will include Carney’s impact on the property world.
Canada’s property bubble
Property is one of Canada’s recent success stories. Whilst officials have been keen to play down Carney’s role as just one of a number of people which helped the country’s property and currency grow to enviable levels, the fact remains that he left Canada with a growing housing bubble and an overvalued currency – an exciting prospect for any trainee estate agent if he can replicate these results over this side of the Atlantic.
On another note, Carney managed to help Canada all but dodge the financial crisis, which hit Britain particularly hard. His quick-footed approach meant that action was taken immediately and problems could be nixed before they had a chance to take hold.
Fixing the banks
One of Carney’s most important first missions will be to help with the ongoing fixing work of Britain’s banks. This, of course, has a knock-on effect for the housing industry, as more lending makes for higher demand, rising prices and better conditions for future builds. In specific, economic terms, Carney will need to manage the combinations of recapitalisation, provisioning writedowns and write-offs. If done successfully, this will make it easier for banks to find themselves and be self-sufficient, thus making lending a much more favourable option.
Looking ahead, Carney is also expected to continue with the Bank of England’s use of innovation to help put it ahead of global competitors – or, at least, that’s what many are hoping for. The Bank of England is renowned for its use of innovation and unorthodox thinking, especially where finance is concerned.
Bringing in new blood could go one of two ways – either a fresh approach and a new unorthodoxy, or a complete change to more traditional approaches. Whilst the Bank of England’s unorthodoxy can have huge – sometimes disastrous – impacts, it can also help elevate it to the highest standing in the world; something that would be very welcome in today’s climate. Given that this break from tradition is typically associated with the finance business, it could see large-scale, innovative and unique ways of helping Brits get on or up the housing ladder.
Carney’s installation as the Bank of England’s Governor was itself somewhat unorthodox, so it is hoped he will continue this throughout his five-year tenure.
Many labels have been thrown at Carney, everything from a “saviour” to just one cog in a much larger machine. Either way, his arrival brings with it much excitement, although history will, quite rightly, judge him on results rather than hyperbole.